Kidder, one of five children, was born in Yellowknife, Northwest Territories, Canada, the daughter of Jill (née Wilson), a history teacher, and Kendall Kidder, an explosives expert and mining engineer. She was born in Yellowknife because of her father's job, which required the family to live in remote locations. She has a sister, Annie, and three brothers, John, Michael and Peter. Kidder's niece, Janet Kidder, is also an actress.

In the late 1960s, Kidder was based in Toronto. She appeared in a number of TV drama series for the CBC, including guest appearances on Wojeck, Adventures in Rainbow Country, and a semi-regular role as a young reporter on McQueen. Later, she made an appearance as a barmaid in Nichols, a short-lived James Garner vehicle made for American television, and she was a guest star in a 1972 episode of the George Peppard detective series Banacek.

She appeared in a number of low-budget Canadian movies in the late 1960s (The Best Damn Fiddler from Calabogie to Kaladar being her first feature) and early 1970s before going on to star in the Brian de Palma psychological thriller Sisters (1973) and the horror film Black Christmas (1974).

A nude pictorial of Kidder, photographed by Douglas Kirkland, was published in the March 1975 issue of Playboy. The accompanying article was written by her as a condition of appearing; she said, "I don't want someone writing, 'Margot Kidder has more curves than the Pacific Coast Highway' under my picture."

Kidder is best known for her role as Lois Lane in the 1978 film Superman: The Movie and its sequels. She publicly disagreed with the decision of producers Alexander Salkind and Ilya Salkind to replace Richard Donner as director of 1980's Superman II. As a result, Kidder's role in 1983's Superman III consisted of less than five minutes of footage. Her role in 1987's unsuccessful Superman IV: The Quest for Peace was more substantial.

In 2004, Kidder briefly returned to the Superman franchise in two episodes of the television program Smallville, as Dr. Bridgette Crosby, an emissary of Dr. Swann (played by her Superman co-star, Christopher Reeve). (Many other actors from the Christopher Reeve Superman films have had small roles on Smallville.)

In addition to the Superman movies, Kidder has starred in The Amityville Horror, Willie & Phil, Some Kind of Hero with her Superman III co-star Richard Pryor, and The Great Waldo Pepper opposite Robert Redford. She has also made uncredited cameo appearances in Maverick and Delirious.

In 1970, Kidder co-starred as Zazel Pierce opposite Gene Wilder as Quackser Fortune in Quackser Fortune Has a Cousin in the Bronx. In 1979, she hosted season 4, episode 15 of the American sketch comedy TV show Saturday Night Live. In 1983, she produced and starred as Eliza Doolittle in a TV version of Pygmalion with Peter O'Toole.

In 1990, Kidder appeared in introductions for the Discovery Channel's "Best of the BBC" series of repackaged documentaries, among them Making of a Continent. From 1993–1996, she was the voice of the character Gaia in Captain Planet and the Planeteers.

In 2000, Kidder played Eileen Canboro in Apocalypse III: Tribulation, a Christian film dealing with Christian eschatology and the Rapture. Kidder stated afterwards that she didn't realize until she was on the set that the movie was serious.