Born in Baltimore, Maryland, she graduated from Western Senior High School. Dunnock was a school teacher who did not start acting until she was in her early thirties. She attended Goucher College where she was a member of Alpha Phi sorority. After a couple of roles in Broadway productions during the 1930s, Mildred Dunnock won praise for her performance as a Welsh school teacher in The Corn is Green in 1940. The 1945 film version marked her screen debut. During the 1940s she performed mainly on stage, in such dramas as Another Part of the Forest (1946) and Death of a Salesman (1949) and in the musical Lute Song (1946). In 1947,  Mildred Dunnock became a founding member of the Actors Studio. Mildred Dunnock reprised her Salesman role in the 1951 film version. She originated the role of Big Mama in the Tennessee Williams’ Cat on a Hot Tin Roof, although she lost the movie role to Judith Anderson. Her films include The Trouble with Harry (1955), Love Me Tender (1956), Baby Doll (1956), Peyton Place (1957), The Nun’s Story (1959), BUtterfield 8 (1960), and Sweet Bird of Youth (1962). She was the woman in the wheelchair pushed down a flight of stairs to her death by the psychotic villain Tommy Udo (Richard Widmark) in Kiss of Death (1947). She appeared frequently in guest roles on numerous TV series such as Alfred Hitchcock Presents and Ponds Theater, and later in her career, several television movies, including a remake of Death of a Salesman in which she played Linda Loman for the third time.

Mildred Dunnock was twice nominated for an Academy Award for Best Supporting Actress, for Death of a Salesman in 1951, and for Baby Doll in 1956. She was also nominated for the Golden Globe for Best Supporting Actress for Baby Doll, as well as Viva Zapata! in 1952 and Peyton Place in 1957. Her final film was The Pick-up Artist (1987), which starred Robert Downey, Jr. and Molly Ringwald. Dunnock has a star on the Hollywood Walk of Fame for her contribution to motion pictures, at 6613 Hollywood Boulevard. She is also a member of the American Theater Hall of Fame, which she was inducted into in 1983. Mildred Dunnock was married to Keith Urmy, an executive at Chemical Bank in Manhattan, from 1933 until her death, and had one child. She died in Oak Bluffs, Massachusetts at age 90 from natural causes.