Garr was born in Lakewood, Ohio. Her father, Eddie Garr (born Edward Leo Gonnoud), was a vaudeville performer, comedian, and actor whose career peaked when he briefly took over the lead role in the Broadway drama Tobacco Road. He changed his surname before Teri's birth. Her mother, Phyllis Lind (née Emma Schmotzer), was a dancer, a Rockette, wardrobe mistress, and model. Her father was of Irish descent and her maternal grandparents were Austrian immigrants.
Early in her career she was credited as Terri Garr, Terry Garr, Teri Hope, or Terry Carr. Her movie debut was as an extra in A Swingin' Affair (1963). At the end of her senior year in high school (at Magnificat High School) she auditioned for the cast of the Los Angeles road company production of West Side Story, where she met one of the most important people in her early career, David Winters, who became her friend, her dance teacher, and her mentor and cast her in many of his early movies and projects.
When asked in a magazine interview about how she landed jobs in so many Presley films, Garr answered, "One of the dancers in the road show of West Side Story, (David Winters) started to choreograph movies and, whatever job he got, I was one of the girls he'd hire. So he was chosen to do Viva Las Vegas. That was my first movie."
In October 2002, Garr publicly confirmed that she was battling multiple sclerosis. After years of uncertainty and secrecy surrounding her diagnosis, Garr explained her reasons for deciding to go public: "I'm telling my story for the first time so I can help people. I can help people know they aren't alone and tell them there are reasons to be optimistic because, today, treatment options are available." In interviews, she has commented that she first started noticing symptoms while in New York filming Tootsie. For the next few years, as acting jobs brought her to various locations around the world, she continued to see different doctors in different cities, until she finally found a doctor who correctly diagnosed her as having MS.
After disclosing her condition, she became a National Ambassador for the National Multiple Sclerosis Society and National Chair for the Society's Women Against MS program (WAMS). In November 2005, Garr was honored as the society's Ambassador of the Year. This honor had been given only four times since the society was founded.
On December 21, 2006, she suffered a ruptured brain aneurysm in her home. Her 13-year-old daughter called 9-1-1 when she could not wake her mother up. After therapy to regain her motor skills and speech, she appeared on Late Show with David Letterman on June 19, 2008, without the need of a wheelchair. She was on the show to promote Expired, a 2007 film in which she played a set of twins.
However, because of her battle with multiple sclerosis, Garr has had recent trouble finding acting work. She has not acted in films or television since 2007, though she did publicly appear at the 19th Annual Race to Erase MS (multiple sclerosis) event in 2012.Closer reported in 2015 that she credited her positive attitude and support of her family as helping her fight the disease.