Parrilla was born in the Brooklyn borough of New York City in 1977. Her mother, Dolores Dee Azzara, is of Sicilian ancestry and her father was Sam Parrilla (1943–94), a Puerto Rico-born baseball player who played professionally for eleven seasons (1963–73), including with the Major League Philadelphia Phillies as an outfielder for one season (1970). She is also the niece of Candice Azzara, the American Broadway and TV actress.

In her early career, Parrilla appeared in several movies, including Very Mean Men (2000), Spiders (2000), and Frozen Stars (2003). She made her television debut in 1999, on the UPN sitcom Grown Ups. In 2000, she joined the cast of the ABC comedy series Spin City, playing Angie Ordonez for one season. She left the show in 2001. After that she joined Donnie Wahlberg and Neal McDonough in the short lived crime drama Boomtown, for which she received the Imagen Award for Best Supporting Actress, for her portrayal of Teresa, a paramedic. Initially a success, Boomtown began to struggle, and Parrilla’s character became a police academy rookie, to tie her more closely to the rest of the show. “Boomtown” was canceled just two episodes into its second season.

Parrilla guest-starred in a number of television dramas, including JAG, Six Feet Under, Covert Affairs, Medium, The Defenders and Chase. She had a recurring role in 2004 as Officer Janet Grafton in NYPD Blue. In 2005, Parrilla took a recurring guest role on the fourth season of the Fox series 24 as Sarah Gavin, a Counter Terrorist Unit agent. After just six episodes, Lana was made a regular cast member; but in the thirteenth episode, her character was written out after she tried to thwart another character’s promotion from temporary to permanent CTU head Michelle Dessler (Reiko Aylesworth).

In 2006, Parrilla starred in the NBC summer series Windfall alongside Luke Perry, fellow former 24 cast member Sarah Wynter, and Parilla’s former Boomtown castmate Jason Gedrick. In 2007, she guest starred as Greta during the third season of ABC’s Lost in the episodes “Greatest Hits” and “Through the Looking Glass” In 2008, she had a leading role on the Lifetime movie The Double Life of Eleanor Kendall, in which she played Nellie, a divorcee whose identity has been stolen. Also in 2008, she starred in the CBS summer series Swingtown as Trina Decker, a woman who is part of a Swinging couple. In 2010, Parrilla had a female lead role in the Jerry Bruckheimer-produced Miami Medical on CBS, which had a short run towards the end of the 2009–10 television season before it was canceled in July 2010. Windfall, Swingtown and Miami Medical were all canceled after 13 episodes.

In February 2011, she was cast as Mayor Regina Mills/The Evil Queen, in the ABC adventure fantasy drama pilot, Once Upon a Time created by Edward Kitsis and Adam Horowitz. The series debuted in October 2011. The pilot episode was watched by 12.93 million viewers and achieved an adult 18–49 rating/share of 4.0/10 during the first season, receiving generally favorable reviews from critics.

Parrilla’s performance also received positive reviews from critics. In 2012 and 2013, she was regarded as a promising contender for an Emmy Award in the Outstanding Supporting Actress in a Drama Series category, though she did not receive a nomination. She won the TV Guide Award for Favorite Villain and the ALMA Award for Outstanding Actress in a Drama Series in 2012. Parrilla also received a nomination for Best Supporting Actress on Television from the 38th Saturn Awards. Due to her role in Once Upon a Time, Parrilla has gained a significant cult following from fans across the world and continues to attend fan events.

Parrilla became engaged to Alfredo Di Blasio, an executive with a technology firm, on April 28, 2013, while traveling in Israel. They were married on July 5, 2014, in British Columbia. They divorced on November 5, 2018, which Parrilla revealed in an Instagram post dated April 13, 2019.