Diaz was born and raised in San Diego, California, the daughter of Emilio Díaz, a Cuban-American father who worked as a foreman for an oil company, and mother Billie Early, an exporting agent whose ancestry includes English, German, and Native American. She attended Long Beach Polytechnic High School.

At age 16 she landed a contract with the prestigious Elle modelling agency. After graduating from High School she went to work in Japan, there meeting video director Carlo de la Torre. On her return to America she moved in with him. For the next few years her modelling took her around the world, working for contracts with major companies.

At the age of 21 she auditioned for a part in the Jim Carrey movie The Mask. To her own surprise, and with no previous acting experience, she was cast as the female lead. Immediately on getting the part she signed up for acting lessons.

Over the next three years she honed her acting skills in low budget, independent films such as The Last Supper (1995), Feeling Minnesota (1996), and She's The One (1996).

She returned to mainstream as "perfect" fiancée in the romantic comedy in My Best Friend's Wedding (1997) with Julia Roberts. Her lead role in the crude comedy hit There's Something About Mary (1998), as a woman desired by every male character in the film, at last established her as a cinema icon of female beauty. The film grossed $369.8 million worldwide and provided her with genuine star status.

Díaz then returned to independent film with the quirky Being John Malkovich (1999), which earned her Best Supporting Actress nominations at the Golden Globes, the BAFTA Awards and the SAG Awards. That year she also appeared in Oliver Stone's Any Given Sunday. Both films enjoyed critical and commercial success and critics heralded Díaz's performances.

She then went on her biggest box-office tear. In 2000 she starred in the TV-to-film adaptation of Charlie's Angels that made $264.1 million worldwide and voiced a character in Shrek which made $484.4 million worldwide. In 2001 she starred in Cameron Crowe's Vanilla Sky which made $203.3 worldwide and saw her nominated for Support Actress honors at the Golden Globes, the SAG Awards and the AFI Awards. She won Best Supporting Actress honors for the role at the Chicago Film Critics Association Awards and the Boston Society of Film Critics Awards. In January 2002, she became only the 2nd actress ever to be paid $20 million for a role (Julia Roberts was the first). when she signed up for Charlie's Angels: Full Throttle.

Yet things began to sour for Diaz after joining the $20 million club. In 2002 she saw her chick-flick The Sweetest Thing tank at the box office. She then appeared in Gangs of New York. Despite of having the honor of appearing in a film directed by Martin Scorsese and appearing in a film that was nominated for many Academy Awards, her performance wasn't considered a highlight of the film. In 2003 the sequel Charlie's Angels: Full Throttle underperformed at the box office. Things looked up a bit as she was paid $10 million for a little over a week's worth of voice work on Shrek 2, which smashed box-office records, grossing $920.6 million worldwide in total.

Diaz continues to struggle to appear in a successful film in which she makes a live action appearance. After having avoided smaller films in the past couple of years, she starred in Curtis Hanson's In Her Shoes, based on the Jennifer Weiner novel. While the film may have restored her good graces with some critics, it quickly fizzled out at the box office.

In 2004, an old S&M video, where Diaz appeared when she was 19 years old, was leaked out on the Internet. The video was a recording of a S&M photo session with Diaz and another girl torturing a man. Diaz has filed a suit against the Russian Internet site distributing the video, but this has attracted enough attention to this obscure video to temporarily make it very popular on the Net. The file is now distributed by many porn sites and can be downloaded from any major Peer-to-peer (P2P) network.

In September of 2004, Diaz created some controversy after her appearance on The Oprah Winfrey Show. The show in question, concerned celebrities encouraging young people to vote in the upcoming Presidential election. While Diaz was sitting next to her Charlie's Angels co-star Drew Barrymore, singer Christina Aguilera, and hip-hop mogul Sean "P. Diddy" Combs, Diaz gave the ominous warning "Women have so much to lose. I mean, we could lose the right to our bodies. We could lo--if you think that rape should be legal, then don't vote. But if you think that you have a right to your body, and you have a right to say what happens to you and fight off that danger of losing that, then you should vote." Several pundits like talk show host Laura Ingraham alleged that Diaz was trying to disguise her scare tactic-like statement as another way of saying that if you didn't vote for Democratic challenger John Kerry, a victorious President George W. Bush would somehow try to ban the right to have a legal abortion. It should be noted that Cameron Diaz was very vocal of her support for Al Gore in 2000. Diaz went as far as sporting a t-shirt that read I WON'T VOTE FOR A SON OF A BUSH! while making publicity for Charlie's Angels.