Alia Bhatt was born on 15 March 1993 in Bombay (present-day Mumbai) into the Bhatt family to Indian film director Mahesh Bhatt and actress Soni Razdan. Her father is of Gujarati descent and her mother is of Kashmiri Pandit and German ancestry. She holds British citizenship. She has an elder sister, Shaheen, and two half-siblings, Pooja and Rahul Bhatt. Actor Emraan Hashmi and director Mohit Suri are her paternal cousins, while producer Mukesh Bhatt is her uncle. Bhatt was educated at the Jamnabai Narsee School.

Bhatt had her first leading role in 2012 with Karan Johar’s teen film Student of the Year, alongside Sidharth Malhotra and Varun Dhawan. She auditioned alongside 500 girls and was cast after losing 16 kg. She played a sophisticated teenage girl involved in a love triangle. Anupama Chopra of Hindustan Times mentioned similarities between her character and the one played by Kareena Kapoor in Johar’s Kabhi Khushi Kabhie Gham… (2001), but noted that her performance was “without the killer attitude”. Lisa Tsering of The Hollywood Reporter dismissed her as “a washout. Not only is she inelegant in the dance numbers, but her expressions are limited; and the digital retouching of her face throughout the film is a distraction”. Student of the Year grossed ₹960 million (US$13 million) at the box office.

Bhatt has performed on stage at the Filmfare, Screen and Stardust award ceremonies, and has also participated in a stage show in Hong Kong alongside Varun Dhawan and Sidharth Malhotra. In 2013, she performed at a charity event with Dhawan, Malhotra, Aditya Roy Kapur, Shraddha Kapoor and Huma Qureshi to raise funds for the flood-affected victims of Uttarakhand. In August 2016, she performed in various cities of America for the “Dream Team 2016” tour, alongside Johar, the actors Dhawan, Malhotra, Roy Kapur, Katrina Kaif, Parineeti Chopra, and the singer Badshah.

In 2013, Bhatt took part in a campaign for PETA to raise awareness on homeless animals. In 2017, she launched an ecological initiative named CoExist to raise awareness about the welfare of street animals. The following year, she collaborated with Facebook Live for a campaign named Find Your Green, to campaign for environmentalism. Bhatt designed her own clothing brand for women in 2014 for the online fashion portal Jabong.com and in 2018, she launched her own line of handbags for VIP Industries.

Continuing her collaboration with Johar’s production company, Dharma Productions, Bhatt starred in the romantic films 2 States and Humpty Sharma Ki Dulhania (both 2014). The former was an adaptation of Chetan Bhagat’s novel of the same name, and is about two management students who have trouble convincing their parents of their relationship. For her role as a headstrong Tamil girl, she learnt to speak her lines in the language with help form a tutor. Shubhra Gupta of The Indian Express was appreciate of Bhatt, labelling her a “surprise” and “easy and fresh and natural”. She played a Punjabi girl who has an affair before her wedding in Shashank Khaitan’s Humpty Sharma Ki Dulhania. Co-starring Varun Dhawan, the film was described as a tribute to Dilwale Dulhania Le Jayenge (1995) by Johar. Writing for India Today, Rohit Khilnani thought that Bhatt had pitched in “one of her best performances so far”, though Nandini Ramnath of Mint found her lacking in subtlety, writing that she was “more comfortable acting out her feelings through dialogue and actions”. Both films were commercially successful, each earning over ₹1 billion (US$14 million) worldwide. Her accomplishments in 2014 established her in Bollywood.

Bhatt has performed playback singing for the song “Sooha Saaha” in Highway (2014). A. R. Rahman, the composer of the film, invited her to his music school to undergo training. In 2014, she sang the unplugged version of the song “Samjhawan”, for the composers Sharib-Toshi, in Humpty Sharma Ki Dulhania. In 2016, she sang an alternate version of the song “Ikk Kudi”, for the soundtrack of Udta Punjab, with her co-star Dosanjh.

Bhatt collaborated with Bahl once again in the romantic comedy Shaandaar. Released in 2015, the film featured Shahid Kapoor and Bhatt as insomniacs who fall in love during a destination wedding. Kunal Guha of Mumbai Mirror criticised the film and wrote that Bhatt “socks life into her character but fails to pump any into this film”. Shaandaar did not perform well commercially. She began 2016 with a supporting role in the ensemble drama Kapoor & Sons, which was a critical and commercial success.

In 2017, Bhatt was featured by Forbes Asia in their 30 Under 30 list. She has appeared in Forbes India’s Celebrity 100 list since 2014, peaking at the eighth position in 2019. That year, the magazine estimated her annual income to be ₹592.1 million (US$8.3 million) and listed her as the highest-paid actress in the country. In 2018 and 2019, the Indian edition of GQ featured her among the nation’s 50 most influential young people and credited her for “striking a balance between big-budget, all-star blowouts and more script-oriented films”. Bhatt was listed in first place in The Times of India’s “50 Most Desirable Women” list of 2018.

Bhatt is also the celebrity endorser for a number of brands and products, including Coca-Cola, Garnier and Maybelline. Duff & Phelps estimated her brand value to be US$36.5 million, in 2018, the eighth highest of Indian celebrities.

In 2019, Bhatt launched her own production company named Eternal Sunshine Productions. She starred opposite Ranveer Singh in Zoya Akhtar’s Gully Boy, a musical inspired by the life of the street rappers Divine and Naezy. She attended acting workshops to learn a ghetto dialect to enable her to improvise on set. The film premiered at the 69th Berlin International Film Festival. Writing for Screen International, Lee Marshall opined that “it’s Bhatt’s sharp performance that carries most successfully the mix of wry humour, romance and social comment that Gully Boy essays”. With global earnings of over ₹2.37 billion (US$33 million), the film emerged as Bhatt’s highest-grossing release. Gully Boy won a record 13 Filmfare Awards, and Bhatt was awarded with her career’s third Best Actress trophy. The ensemble period drama Kalank marked Bhatt’s biggest-budget film to that point. Set in the 1940s prior to the partition of India, it featured Dhawan and her as star-crossed lovers. She watched the films Mughal-e-Azam (1960) and Umrao Jaan (1981) to learn the body language of women from the era; to better her Urdu-speaking skills, she watched the Pakistani television series Zindagi Gulzar Hai. Shubhra Gupta bemoaned that she was “watchable, if increasingly, exasperatingly familiar”. The film did not perform well at the box office.