Lynch was born in Philadelphia and is the daughter of artist and filmmaker David Lynch. She graduated from the Interlochen Arts Academy and her family helped her get started with her film career. Lynch had a scene in her father’s debut film Eraserhead which was cut and she served as a production assistant on his film Blue Velvet.
In 1990, she authored "The Secret Diary of Laura Palmer" to accompany the television show Twin Peaks.
Her first attempt as a writer and director came from Boxing Helena. The film was surrounded with controversy and upon its release, it was met with poor reviews and was a flop at the box office. This lead Lynch into a lengthy hiatus until 2008.
She jumped back into writing screenplays for films like Surveillance, Chained, and A Fall from Grace. For Surveillance, Lynch became the first woman to receive the New York City Horror Film Festival's Best Director award.
Lynch also directed episodes of many television shows such as Finding Carter, Psych, The Walking Dead, The Last Ship, Wayward Pines, Recovery Road, Damien, American Horror Story, Once Upon a Time, and Hawaii Five-0.