Carter was born in McLemoresville, Tennessee, and spent many of her early years in Memphis. She attended college at the University of Memphis and Rhodes College.  In college, she was a member of the Delta Delta Delta sorority. In 1959, Carter competed in the Miss Tennessee pageant, where she placed first runner-up to Mickie Weyland. Carter won the Miss Volunteer beauty pageant at the University of Tennessee in the same year.  In 1960, Carter made her professional stage debut in a Memphis production of Carousel. She moved to New York City in 1963 and got a part in a production of Shakespeare’s The Winter’s Tale.

In 1967, she began an eight-year hiatus from acting, to focus on raising her two daughters; she returned to the craft in 1974, when she filled in for actress Nancy Pinkerton as Dorian Cramer on One Life to Live, while Pinkerton was on maternity leave. She subsequently was cast in the role of Assistant D.A. Olivia Brandeis “Brandy” Henderson on the soap opera The Edge of Night, on which she appeared from 1974 to 1976. (She went along with the show when it switched from CBS to ABC.) Carter took the role though some advised her that doing a daytime soap might negatively affect her career. However,she was first noticed in this role, and after leaving Edge of Night in 1976, she relocated from New York to Los Angeles and pursued prime-time television roles. In 1976, she won the Theater World Award for Jesse and The Bandit Queen.  She appeared in series such as Out of the Blue (as Aunt Marion), On Our Own (as April Baxter), Diff’rent Strokes (as the first Maggie McKinney Drummond, Phillip Drummond’s second wife), The Greatest American Hero (playing a KGB spy), and as the stuck-up and conniving Carlotta Beck on Filthy Rich (1982).

Carter’s appearance in Filthy Rich paved the way for her most notable role, that of sharp-tongued liberal interior decorator Julia Sugarbaker in the 1986–1993 television program Designing Women, set in Atlanta. Filthy Rich was created by Linda Bloodworth Thomason, who also went on to create Designing Women. (In the beginning, without knowing the content of the show, Bloodworth-Thomason’s only idea was to create a show starring Carter, and fellow cast mates Delta Burke, Annie Potts, and Jean Smart. Filthy Rich also featured fellow Designing Women cast member Delta Burke in its cast.) After much persuasion from creators Linda Bloodworth-Thomason and her husband, Harry Thomason, Hal Holbrook, Carter’s real-life husband, had a recurring role as attorney Reese Watson. Carter’s daughters, Ginna and Mary Dixie Carter, also had guest-star roles as Julia Sugarbaker’s nieces, Jennifer and Camilla, in the episode “The Naked Truth” in 1989.  In 1997, Carter starred as Maria Callas in the Terrence McNally Broadway play Master Class. She played the role from January to June. The role had previously been played by Zoe Caldwell and Patti LuPone.

Famous for portraying strong-minded Southern women, Carter provided the voice of Necile in Mike Young Productions’ direct-to-video 2000 cartoon feature The Life and Adventures of Santa Claus. She was also in the voice cast of My Neighbors the Yamadas, the English-language dub of Studio Ghibli’s 1999 anime movie of the same.  From 1999 to 2002, she portrayed Randi King on the legal drama Family Law, portraying a lawyer for the first time since she played Brandy Henderson on The Edge of Night. From 1999 to 2000, she also was a cast member on the short-lived sitcom Ladies Man, appearing as a regular on both Ladies Man and Family Law, simultaneously. In 2004, she made a guest appearance on Law and Order: SVU, playing a defense attorney named Denise Brockmorton in the episode called “Home”, in which she defended the paranoid mother of two children (Diane Venora) who had manipulated her older son to kill the younger son, after breaking her home rules.

Carter starred in several Broadway musicals and plays. She appeared on- and off-Broadway, as well, playing the role of Melba Snyder in the 1976 Circle in the Square revival of Pal Joey and diva Maria Callas in Terrence McNally’s Master Class, a role created by Zoe Caldwell.  In 2006–07, Carter found a resurgence of fame with a new generation of fans portraying Gloria Hodge, Bree Van de Kamp’s disturbed (and scheming) mother in law, on Desperate Housewives. Creator Marc Cherry started out in Hollywood as Carter’s assistant on the set of Designing Women. Her first and only Emmy Awards nomination was for the 59th Primetime Emmy Awards under the category of Outstanding Guest Actress in a Comedy Series for her role as Gloria Hodge.

Carter gave an interview in 2006 for the feature-length documentary, That Guy: The Legacy of Dub Taylor, which received support from Taylor’s family and many of Dub’s previous coworkers, including Bill Cosby, Peter Fonda, Don Collier, Cheryl Rogers-Barnett, and many others. The project was scheduled to have its world premiere at Taylor’s childhood hometown of Augusta, Georgia, on April 14, 2007.  Her final film was That Evening Sun, which she filmed on site with her husband Hal Holbrook in East Tennessee in the summer of 2008. The film was produced by Dogwood Entertainment (a subsidiary of DoubleJay Creative) and is based on a short story by William Gay. That Evening Sun premiered at South By Southwest, where it competed for the narrative feature grand jury prize.

In 1967, Carter married businessman Arthur Carter (no relation). They had two daughters (who would later appear in an episode of Designing Women), Mary Dixie and Ginna. Following the birth of her daughters, Carter left acting for eight years to focus on raising her children along with Arthur’s three children, Jon, Whendy, and Ellen Carter. Later, she had grandchildren, Jake, Harrison, and Sophia Carter.  She divorced Arthur Carter in 1977, and married Broadway and TV actor George Hearn the same year. Two years later, she divorced Hearn. She was married for the third time on May 27, 1984, to Hal Holbrook (14 years her senior), who is most noted for his appearances as Mark Twain. Carter renovated her old family home in McLemoresville with the designs of architect Hoyte Johnson of Atlanta. She and Holbrook divided their time between their homes in Beverly Hills, California, and McLemoresville, Tennessee, where Carter’s elderly father, Halbert, resided until his death in early 2007, at age 96.  In 1996, Carter published a memoir titled Trying to Get to Heaven, in which she talked frankly about her life with Hal Holbrook, Designing Women, and her plastic surgery during the show’s run. She acknowledged, along with other celebrities, having used human growth hormone for its antiaging properties.

Carter died on April 10, 2010, in Houston. Her death was announced by her husband, who stated the cause as complications from endometrial cancer which was diagnosed earlier in 2010. In addition to Holbrook, she is survived by her daughters from her first marriage: Ginna Carter (of Los Angeles) and Mary Dixie Carter (of Brooklyn), as well as a sister, Melba Helen Heath (of San Anselmo, California) and several nephews and nieces. In addition to family, her funeral, held on April 15, 2010, was attended by Designing Women co-stars Delta Burke, Annie Potts, and Jean Smart. Dixie Carter was interred in her hometown, McLemoresville, Tennessee.  The Dixie Carter Performing Arts and Academic Enrichment Center (informally called “The Dixie”) in Huntingdon, Tennessee, is named in honor of Carter.  A public service announcement made by Carter in 2003 describing and offering outreach to sufferers of spasmodic torticollis / cervical dystonia began appearing in New York and New Jersey, and then across the United States in 2010.