Under contract with Samuel Goldwyn, O'Donnell made her film début in an uncredited role as an extra in Wonder Man (1945).
O'Donnell's first major film role was in 1946's highly acclaimed The Best Years of Our Lives, playing Wilma Cameron, the high-school sweetheart of Navy veteran Homer Parrish. Homer was played by real-life World War II veteran and double amputee Harold Russell.
Then 24-year-old O'Donnell married 47-year-old Robert Wyler, the elder brother of film Director william Wyler, on April 11, 1948. She had met her husband two years earlier, while being directed by his brother in The Best Years of Our Lives (he would also direct her in Detective Story [co-written by Robert Wyler] and Ben-Hur). She died on her 22nd wedding anniversary, April 11, 1970, of a cancer-related cerebral hemorrhage following a long illness. Her husband died nine months later. The couple had no children. She is interred at Forest Lawn Memorial Park, Glendale, California.
O'Donnell was loaned out to RKO for They Live by Night (1949), one of her most memorable films. Farley Granger played her love interest. The film is widely considered a classic of the noir genre, and is on the Guardian's list of the top ten noir films. It was directed by Nicholas Ray. The two actors were later re-teamed for Side Street (1950).
Later O'Donnell starred in The Miniver Story (also 1950), as Judy Miniver and also had a supporting role in Detective Story (1951). She appeared as Barbara Waggoman, the love interest of James Stewart's character in the western The Man from Laramie (1955). Her final film role was in Ben-Hur (1959). She played the part of Tirzah, the sister to Judah Ben-Hur. The film won the Academy Award for Best Picture in 1959.
In the 1960s, she appeared in TV shows, appearing on shows such as Perry Mason, The Rebel and Man Without a Gun. Her last screen appearance was in 1964, in an episode of Bonanza.