Binoche was born in Paris, the daughter of Jean-Marie Binoche, a director, actor, and sculptor, and Monique Yvette Stalens (born 1939), a teacher, director, and actress. Her father, who is French, also has one eighth Portuguese-Brazilian ancestry; he was raised partly in Morocco by his French-born parents. Her mother was born in Częstochowa, Poland. Binoche's maternal grandfather, Andre Stalens, was born in Poland, of Belgian (Walloon) and French descent, and Binoche's maternal grandmother, Julia Helena Młynarczyk, was of Polish origin. Both of them were actors who were born in Częstochowa; the German Nazi occupiers imprisoned them at Auschwitz as intellectuals.

When Binoche's parents divorced in 1968, four-year-old Juliette and her sister Marion were sent to a provincial boarding school. During their teens, the Binoche sisters spent their school holidays with their maternal grandmother, not seeing their parents for months at a time. Binoche has stated that this perceived parental abandonment had a profound effect on her.

She was not particularly academic and in her teenage years began acting at school in amateur stage productions. At seventeen, she directed and starred in a student production of the Eugène Ionesco play, Exit the King. She studied acting at the Conservatoire National Supérieur d'Art Dramatique (CNSAD), but quit after a short time as she disliked the curriculum. In the early 1980s, she found an agent through a friend and joined a theater troupe, touring France, Belgium and Switzerland under the pseudonym "Juliette Adrienne". Around this time, she began lessons with acting coach Vera Gregh.

Binoche's early films established her as a French star of some renown. In 1983, she auditioned for the female lead in Jean-Luc Godard's controversial Hail Mary, a modern retelling of the Virgin birth. Godard requested a meeting with Binoche having seen a photo of her taken by her boyfriend at the time. Although she said she spent six months on the film's set in Geneva, her presence in the final cut is confined to just a few scenes. Further supporting roles followed in a variety of French films. Annick Lanoë's Les Nanas gave Binoche her most noteworthy role to date, playing opposite established stars Marie-France Pisier and Macha Méril in a mainstream comedy, though she has stated the experience was not particularly memorable or influential. She gained more significant exposure in Jacques Doillon's critically acclaimed Family Life cast as the volatile teenage step-daughter of Sami Frey's central character. This film was to set the tone of her early career. Doillon has commented that in the original screenplay her character was written to be 14 years old, but he was so impressed with Binoche's audition he changed the character's age to 17 to allow her take the role. In April 1985, Binoche followed this with another supporting role in Bob Decout's Adieu Blaireau, a policier thriller starring Philippe Léotard and Annie Girardot. Adieu Blaireau failed to have much impact with critics or audiences.

In the 1990s, Binoche was cast in a series of critically and commercially successful international films, winning her praise and awards. In this period, her persona developed from that of a young gamine to a more melancholic, tragic presence. Critics suggested that many of her roles were notable for her almost passive intensity in the face of tragedy and despair. In fact, Binoche has nicknamed her characters from this period as her "sorrowful sisters". Following the long shoot of Les Amants du Pont-Neuf, Binoche relocated to London for the 1992 productions of Emily Brontë's Wuthering Heights and Damage, both of which considerably enhanced her international reputation. Yet, from a professional and personal point of view, both films were significant challenges for Binoche; her casting opposite Ralph Fiennes's Heathcliff in Wuthering Heights, instead of English actresses Helena Bonham Carter and Kate Beckinsale, was immediately contentious and drew derision from the British press, unimpressed that a uniquely English role had gone to a French actress. The film had its world premiere at the 1992 Edinburgh International Film Festival. Reviews were poor, with Binoche being cynically dubbed "Cathy Clouseau" and derided for her "franglais" accent. Both Binoche and director Peter Kosminsky distanced themselves from the film, with Binoche refusing to do any promotion for the film or to redub it into French.