Matondkar, who made her screen debut as a child artist in the 1980 film Kalyug, debuted as an adult in Narasimha (1991). She established herself as a popular actress of mainstream Hindi cinema with her roles in films like Rangeela (1995), Judaai (1997), and Satya (1998), all of which earned her Filmfare nominations.
These roles contributed to a new screen persona, where she was known for her intense style and dancing skills, and was frequently featured in the Indian media as a sex symbol.
She subsequently took on several psychological roles, and has delivered a range of critically acclaimed performances. Among these included her roles as a psychopath in Kaun (1999), an obsessive lover in Pyaar Tune Kya Kiya (2001), a ghost-possessed woman in Bhoot (2003), and a merciless avenger in Ek Hasina Thi (2004). For her performance in Bhoot, she won her first Filmfare Award in the Best Performer category, as well as several other awards for Best actress at a number of award ceremonies. She followed it with leading roles in art and independent films, such as Tehzeeb (2003), Pinjar (2003), Maine Gandhi Ko Nahin Mara (2005) and Bas Ek Pal (2006).
During the 2000s, Matondkar revealed strong, dramatic and psychological features in her roles, and delivered a number of critically acclaimed performances. She won favourable reviews for her role as an obsessive lover in Pyaar Tune Kya Kiya (2001), and received various Best Villain nominations for her performance.
In 2003, she was part of several projects. She played the role of a north Indian girl in the background of the 1947 India partition in the critically acclaimed Pinjar. She played the title role in Khalid Mohammed's drama Tehzeeb, starring along Shabana Azmi. However, she was mainly noted for her performance in Bhoot, a horror movie. Matondkar enacted a ghost-possessed woman; her performance was much appreciated by critics and audiences and she won her first Filmfare Award under the Best Performer category, as well as various Best Actress awards at different award ceremonies, such as Star Screen Awards, Zee Cine Awards and Bollywood Movie Awards. She later received the national honour Rajiv Gandhi Award for the film, as a recognition to her achievement in Bollywood. Taran Adarsh wrote of her performance, "...the film clearly belongs to Urmila Matondkar all the way. To state that she is excellent would be doing gross injustice to her work. Sequences when she is possessed are simply astounding. If this performance doesn't deserve an award, no other performance should. It beats all competition hollow."
In 2004, she got critical recognition for her performance as a merciless avenger in Ram Gopal Verma's Ek Hasina Thi, co-starring Saif Ali Khan. She played the role of a deceived woman who is jailed because of her lover, played by Khan, and later flees from prison to avenge him. Once again, Matondkar was nominated for a Filmfare for her performance in the film.
Next year in 2005, she tried her hand with another horror film, playing the title role in the film Naina, which failed. However, her performance as the caring daughter of Anupam Kher in Jahnu Barua's art film Maine Gandhi Ko Nahin Mara was very well received, and she won her second Bollywood Movie Award for Best Actress.
Apart from holding a successful acting career, she is regarded as an outstanding dancer and has been a featured performer in many Bollywood item numbers. Her best-known item number is the Chamma Chamma sequence from the 1998 China Gate. Other hit numbers include Aaiye Aajaye from the hit film Lajja. She was signed to perform the item song in Ram Gopal Varma Ki Aag, a remake of the 1975 blockbuster Sholay. She played the role originally played by Helen.
In 2007, Matondkar lent her voice for Asha Bhonsle's album Asha and Friends Vol 1, where she performed with Bhosle the duet song "Mehbooba Dilruba". In fact, throughout the 1990s – 2000s, Bhosle sang the maximum number of songs for Urmila.
In 2008, Matondkar was seen with Himesh Reshammiya in a remake of the 1980 film Karz, titled Karzzzz. Even though the film flopped miserably at the box office, Urmila was praised for her acting and adding her own flavour to the role of Kamini. That year also marked Matondkar's debut on Indian television as a host of a reality show named Waar Parriwar.
