Olin, the youngest of three children, was born in Stockholm, Sweden. An older brother died of cancer in 1960, 10 years old. She is the daughter of actress Britta Holmberg and director Stig Olin. She studied acting at Sweden’s National Academy of Dramatic Art.

In October 1974, at age 19, Olin was crowned Miss Scandinavia 1974 in Helsinki, Finland.

In 1980, Olin was one of the earliest winners of the Ingmar Bergman Award, initiated in 1978 by the director himself, who was also one of the two judges.

Olin’s international debut in a lead role on film was in Bergman’s After the Rehearsal (1984). Two years earlier, she appeared in a small role in the same director’s Fanny and Alexander. In 1988, Olin starred with Daniel Day-Lewis in her first major part in an English speaking and internationally produced film, The Unbearable Lightness of Being, followed by Sydney Pollack’s Havana (1990), Roman Polanski’s The Ninth Gate (1999), and many others.

In 1989, Olin earned an Academy Award nomination for Best Supporting Actress for her work in Enemies: A Love Story, in which she portrayed the survivor of a Nazi death camp. In 1994 Olin starred in Romeo Is Bleeding and played what is perhaps her most extreme character to date; the outrageous hit woman Mona Demarkov—still one of the actress’s most popular portrayals on film.

In 1992, Olin met film director Lasse Hallström in Sweden. In 1994, they married in Hedvig Eleonora Church in Stockholm. They have a daughter, Tora (born 1995). The couple lives in Bedford, New York.

From the mid 1970s through the end of the 1980s, Olin was for many years the partner of Swedish actor and Royal Dramatic Theatre colleague Örjan Ramberg. They had a son, Auguste Rahmberg (b. 1984). The relationship ended in the late 1980s. She also had a brief relationship with Richard Gere, her co-star in Mr. Jones, before marrying Lasse Hallström in 1994.

From 2002 to 2006, Olin appeared opposite Jennifer Garner in her first American television role, starting on the second season of the successful television series Alias as Irina Derevko. For her work on the series, Olin received an Emmy Award nomination for Outstanding Supporting Actress in 2003.

In May 2005, Olin returned to Alias for a two-episode appearance at the end of the show’s fourth season, and subsequently appeared again in the fifth season, initially in a cameo in December 2005, and then following a four-month hiatus she appeared again in April 2006, and for the finale on 22 May 2006.

In 2005, Olin returned to Sweden for a brief period of filming and starred in a supporting role in Danish director Simon Staho’s film Bang Bang Orangutang (with a punk music soundtrack by, among others, The Clash and Iggy Pop).

In 2008, Olin had a small but significant role in the Oscar-nominated film The Reader (2008), playing a Jewish survivor of the Auschwitz death march in a trial in the 1960s and the woman’s daughter twenty years later.

Between 2014 and 2015, Olin starred in Swedish sitcom Welcome to Sweden.