She began her film career with the Bengali film Biyer Phool. Her first Hindi film was Raja Ki Aayegi Baraat (1996), which did not do well at the box office. However, her next two releases - Ghulam and Kuch Kuch Hota Hai (1998) - were hits. For the latter she received her first Filmfare Award in the Best Supporting Actress category.
Mukerji was in great demand after these successes and signed contracts to appear in many new films. Unfortunately, most of the resulting movies were only average to poor performers at the box office. Her career seemed to be stalled. Then the critical and commercial success of the 2002 film Saathiya again made her a hot commodity in the Bollywood marketplace.
Saathiya was only the first of a string of successful films. In 2004, her performances in Yuva and the commercially successful Hum Tum earned her more awards - the Filmfare Best Supporting Actress Award for the former, and the Filmfare Best Actress Award for the latter, the next year. Her performance as a Pakistani female activist lawyer in Veer-Zaara was also praised, and earned her many award nominations. In 2005, she starred in four high-profile films. Bunty Aur Babli and The Rising were among the biggest grossers of the year. Critics also commented favorably on her work, in particular her performance in Black. These successes established Mukerji as one of the industry's most bankable stars.
Mukerji has been an active stage performer and participated in numerous world tours. Temptations 2004 was her most successful concert, in which she performed alongside Shahrukh Khan, Saif Ali Khan, Preity Zinta, Arjun Rampal and Priyanka Chopra. She also appeared along with various other Bollywood actors at the Closing Ceremony of the 2006 Commonwealth Games in Melbourne, as part of a performance showcasing Indian culture, on behalf of the 2010 Commonwealth Games, to be held in Delhi. Mukerji's biggest success in 2006 has been Karan Johar's Kabhi Alvida Naa Kehna. The movie was successful at the box office and had the highest opening for an Indian movie so far.