Donohoe was born in London, the daughter of Joanna and Ted Donohoe, antique dealers. Her father is of Irish/Russian descent and her mother is Swiss.

She left home at sixteen, and in her early twenties she was accepted at the Central School of Speech and Drama. In the late 1980s she decided to move to Los Angeles to expand her career.

Donohoe first came to attention of the worldwide audience in 1986 when she was cast opposite Oliver Reed as Lucy Irvine in Nicolas Roeg's Castaway.

She followed this up with roles in two Ken Russell films The Lair of the White Worm, based on a Bram Stoker novel, and The Rainbow, based on a D. H. Lawrence novel. In 1981, Amanda appeared in the music video for the song, "Stand & Deliver" by Adam & the Ants.

In February 1991, she took part in the first lesbian kiss on American television when her character CJ Lamb on LA Law kissed Abbie Perkins played by Michelle Greene.

In the Spring of 2001 she replaced Jerry Hall in playing the role of Mrs Robinson on the London stage. She has a brief guest appearance in an episode of Ally McBeal.

Donohoe has constantly worked in film since, and has appeared in several television roles Murder City, Bad Girls and most notably two seasons of L.A. Law. In 2005 she starred in the title role of Hedda Gabler at the Royal Exchange Theatre, Manchester.