Most of Nye’s work was on the stage. She joined the Williamstown Theatre Festival in 1955 and portrayed a number of roles at the festival through the 1960s and 1970s. Among her credits were the leads in The Skin of Our Teeth and A Streetcar Named Desire. She was in the American Shakespeare Festival that performed Troilus and Cressida at the White House during the Kennedy administration.

Nye was born Carolyn Nye McGeoy in Greenwood, Mississippi; her father was a vice president of a local bank. She attended Stephens College in Columbia, Missouri, then attended the Yale School of Drama, graduating in 1959.

She made her debut on Broadway in 1960 in A Second String. The following year she portrayed Tiffany Richards in the original cast of Mary, Mary. She received a Tony Award nomination in 1965 for her portrayal of Helen Walsingham in Half a Sixpence. She appeared in two more productions on Broadway during the 1960s, A Very Rich Woman (1965) and Cop-Out (1969).

She met Dick Cavett at the Yale School of Drama. They married in 1964.

Nye was featured in a number of television movies during the 1970s, including Screaming Skull (1973) and The Users (1978). She also acted in the television movie Divorce His, Divorce Hers (1973), which starred Elizabeth Taylor and Richard Burton. Nye wrote a humorous essay that year published in Time about the experience. In 1978, Nye was a semi-regular panelist on the PBS quiz show We Interrupt This Week. She received a Primetime Emmy Award nomination in 1980 for her portrayal of Tallulah Bankhead in the television film The Scarlett O’Hara War. That same year she returned to Broadway to perform the role of Lorraine Sheldon in a revival of The Man Who Came to Dinner. She was nominated for a Drama Desk Award for her performance.

In 1984, Nye was cast on the daytime soap opera Guiding Light as Susan Piper, an unscrupulous real estate agent going to great lengths, including murder, trying to reclaim a cottage that harbors a deep secret. Her portrayal of the villainous character proved popular for some time, culminating in a location shoot in Barbados, ending with a memorable death scene where she fell into quicksand.

Nye and Cavett bought Tick Hall, a house in Montauk, New York, designed by Stanford White. It burned down in 1997, but with the assistance of architects and preservationists, she and Cavett built an exact replica of the house. Their accomplishment became the subject of a documentary film From the Ashes: The Life and Times of Tick Hall (2003).

When Nye’s friend Ellen Weston became head writer of Guiding Light in 2003, she created another character for Nye, the mysterious Caroline Carruthers. Despite acclaim for Nye’s performance, this storyline was unpopular, changing history for several of the show’s core characters (whom she had crossed paths with in her first stint) and Nye’s character was written off after six months.

Nye died of lung cancer on July 14, 2006, at home in New York, New York. She is interred at the (Lutheran) All Faiths Cemetery in Queens, New York City.