Born and raised in Sacramento, California, Dungey's heart has always been into performing. She studied ballet and ice-skating as a child and took up acting at the age of 18. Dungey hosted a local teen talk show and starred in several commercials. She graduated with a Bachelor of Arts from the UCLA School of Theater. As a sophomore, Dungey was the youngest recipient ever to receive the UCLA Acting Award for Best Actor. Oscar-winner Denzel Washington presented the award to her.

Following UCLA, Dungey went on to study under acting coach Milton Katselas and was signed on to the first pilot she auditioned for, Party Girl. In between acting gigs, she also explored the stand-up circuit, signing with an agent after her first performance. She later wrote and starred in Black Like Who? a one-woman show for HBO Comedy Workspace. This led to a stand-up engagement at the Montreal Comedy Festival in 1998. Her performance garnered great attention and led to an act on Comedy Central's Premium Blend and a recurring role in The King of Queens.

Most recently, Dungey appeared in Alias as Francie, Sydney's (Jennifer Garner) best friend. She has also recurred in Malcolm in the Middle and The WB's Grosse Pointe. Her impressive list of noteworthy guest appearances include Curb Your Enthusiasm, Seinfeld, Friends, ER, The West Wing, Caroline in the City, Murphy Brown, Martin, Living Single and Tracy Takes On... Dungey's film credits include Ed TV, Deep Impact and How to Make an American Quilt. Dungey currently resides in Los Angeles.