Phillips garnered publicity as the girlfriend, and later the first wife, of musician Bruce Springsteen. The two met in October 1984, and they were married in her native Lake Oswego shortly after midnight on Monday, May 13, 1985, surrounded by intense media attention. Citing irreconcilable differences, she filed for divorce in August 1988, which was finalized the following March.

Phillips continued her acting career during and after the marriage. She appeared in Odd Jobs (1986), Sweet Lies (1988), and Seven Hours to Judgment (1988), and starred opposite Chevy Chase in Fletch Lives and John Ritter in Skin Deep both in 1989.

Two years later, she began the role of Frankie Reed, the business-oriented character on Sisters; it became her best-known role. She left the show at the end of its fifth season in 1995, but returned for its final episode in 1996. She then briefly returned to movies, appearing in Big Bully (1996), Colin Fitz Lives! (1997), Allie & Me (1997), and the made-for-TV disaster film Tidal Wave: No Escape (1997).

Phillips stopped acting in 1997 and has been seen in the public eye on very few occasions since then. One was in 2001 when she was interviewed on an episode of the biographical documentary series Intimate Portrait that profiled her Sisters co-star Sela Ward. Another was in 2014 when she was reunited with former Sisters co-stars Ward, Swoosie Kurtz, and Patricia Kalember for a special edition issue of Entertainment Weekly. The reunion was documented on the NBC morning news program Today.