Walter appeared in the first episode of Flipper, shown in September 1964. Also in 1964, she guest-starred in the episode "How Much for a Prince?" of CBS's short-lived drama The Reporter. In 1966, she appeared in an episode of The Fugitive entitled "The White Knight".
In 1974, Walter co-starred in an episode of Columbo, "Mind Over Mayhem". She starred on the short-lived series Amy Prentiss, a spinoff of Ironside and had a recurring role on Trapper John, M.D. as Melanie McIntyre, Trapper John's former wife. In 1983, she had a role on the short-lived NBC primetime soap opera Bare Essence as Ava Marshall. Since then, she has worked most frequently in television and theater, though she did appear in some films including The Flamingo Kid (1984) and the film PCU (1994). In the 1990s, she voiced Fran Sinclair on the ABC comedy Dinosaurs, and appeared on Just Shoot Me! as Eve Gallo, the mother of Maya and the ex-wife of magazine publisher Jack Gallo.
From 2003 to 2006, she appeared in a regular role as the scheming alcoholic socialite matriarch Lucille Bluth on Fox's critically acclaimed comedy series Arrested Development. In 2005, she received an Emmy nomination for Outstanding Supporting Actress in a Comedy Series for the role. Despite her convincing portrayal of Lucille, she states: "I'm nothing like Lucille. Nothing. My daughter will tell you. I'm really a very nice, boring person." Despite acclaim from critics, Arrested Development received low ratings and viewership on Fox, which cancelled the series in 2006. It was revived by Netflix for season four in 2013, where it gained huge popularity. Walter reprised her role for season five, premiering in 2018.
Walter played Tabitha Wilson on the first season of 90210, until the character was written off halfway through the season. She also guest-starred on the sitcom Rules of Engagement in the episode titled "Kids". She guest-starred in an episode of Law & Order: SVU in 2009, and appeared again later on as legal-aid lawyer Petra Gilmartin.
Walter starred as Evangeline Harcourt in the Broadway revival of Anything Goes, which began previews in March 2011 and officially opened on April 7, 2011.
She currently voices spymistress Malory Archer on the FX animated series Archer. She was drawn to the role after learning that the script for the pilot explicitly drew comparisons between Malory and Lucille Bluth.
Walter was at the center of a controversy which erupted in May 2018 over harassment she had received from Arrested Development co-star Jeffrey Tambor. During a cast interview with the New York Times, Walter was asked about an on-set incident which Tambor had alluded to several months before. Walter teared up and stated that "in almost 60 years of working, I’ve never had anybody yell at me like that on a set and it's hard to deal with, but I’m over it now...He never crossed the line on our show, with any, you know, sexual whatever. Verbally, yes, he harassed me, but he did apologize. I have to let it go." In the following exchange, Walters' co-stars Jason Bateman, Tony Hale and David Cross were criticized in multiple outlets for appearing to excuse Tambor's behavior without acknowledging Walters' experience. Within days all three men had issued apologies to Walter.
Since 1983, Walter has been married to actor Ron Leibman, with whom she co-starred in Neil Simon's play Rumors. They also appeared together as husband and wife in the film Dummy (2003) and on Law & Order (in the episode "House Counsel") and he joined the cast of Archer, voicing her character's new husband. She describes herself as not religious, but "very Jewish in my heart".
Walter has a daughter, Brooke Bowman, who was born in 1972, and is currently an executive for 21st Century Fox Television, from her 12-year marriage to Ross Bowman, a former Broadway stage manager and television director.