Lunghi was born in London. Her father, Alessandro Lunghi, was Italian and her mother, Gypsy, was English. After her father returned to Italy, she was brought up in west London by her mother and her aunts.

Educated at the Arts Educational School in Hyde Park, Lunghi played Hedvig in The Wild Duck and Alice in Alice in Wonderland on BBC radio while still at school. After graduating from Homerton College, Cambridge, she joined the Royal Shakespeare Company in the late 1970s, taking leading roles such as Perdita, Cordelia and Viola.

Lunghi left the RSC to pursue a career in film, with probably her best known role as Guinevere in the 1981 film Excalibur. After the birth of her daughter and the breakdown of her marriage, she took various short term parts, including playing the band members' mutual love interest in the music video for Level 42's song "Something About You."

In the mid-1980s she relocated to Los Angeles for eight years, but returned to support her mother, and took on the lead role in football soap-opera The Manageress. As a result, in 1995 she was placed 92nd in the "100 Sexiest Women in the World" by the publishers of FHM magazine.

In addition to her varied film and television work, she is perhaps best known for appearing in a long-running advertising campaign on British television for Kenco coffee from the late 1990s onwards.

In 2006, Lunghi appeared on television in Casualty 1906, as Matron Eva Luckes, and had a recurring guest role in the regular Casualty series as Professor Camille Windsor, the mother of junior doctor Toby Da Silva.

Lunghi is currently competing in the sixth series of Strictly Come Dancing and is partnered by James Jordan. After her first dance, the Foxtrot on the Ladies Night in Week 2, she scored the highest points of the first two weeks