Dutta was born on April 16, 1978 in Ghaziabad, Uttar Pradesh, India. Her father is Wing Commander L.K. Dutta (retired) and her mother is Jennifer Dutta, who is of Punjabi descent and also was a singer for Doordarshan Radio, Jalandhar. She also has two older sisters, one of whom serves in the Indian Air Force and a well known younger sister.
Famed composer and DJ Nitin Sawhney is Dutta's cousin. The Dutta family moved to Bangalore in 1981 where she completed high school from St.Francis Xavier Girl's High School. Lara graduated in economics with a minor in communications from Bombay University at Bangalore. She was crowned Miss Universe in 2000 which led to her appointment as a UNFPA Goodwill Ambassador in 2001.
Dutta won the annual Gladsrags modelling competition in her native India, thus winning the right to be the first Indian representative at the 1997 Miss Intercontinental pageant, in which she took first place. Later, she was crowned Femina Miss India Universe and Miss Universe in 2000.
At Miss Universe 2000 in Cyprus, Dutta was the clear favourite ahead of fierce competition from Venezuela, Spain, USA and Canada. Her finalist interview score was the highest individual score in any category in the history of the Miss Universe contest, as her perfect interview saw a majority of the judges giving her the maximum 9.99 mark. After her final question, in which Dutta delivered a passionate defense of the Miss Universe contest (and other beauty pageants), she became the second Indian Miss Universe.
In the same year, Priyanka Chopra and Diya Mirza won their respective Miss World and Miss Asia Pacific titles which gave India a rare triple victory in the world of beauty pageants.
Dutta primarily signed up to do the Tamil film, Arasatchi in 2002, but due to financial problems, it only released in mid-2004. She made her Hindi debut in 2003 with the film Andaaz which was a box office success and won her a Filmfare Best Female Debut Award. She then appeared in a number of films, some of which failed at the box office and some of which were mildly successful. Her box office "hits" include Masti (2004), Kaal (2005),No Entry (2005) and Partner (2007).
In 2006, she starred in the comedy, Bhagam Bhag which did well at the box office.
Dutta's first release of 2007 was Shaad Ali's Jhoom Barabar Jhoom. The film was a box office failure in India but did better overseas, especially in the U.K. She received mixed reviews for her performance in the film. Her latest release, Partner opened to a good response and became a hit.