Steenburgen was born in Newport, Arkansas, the daughter of Nell, a school-board secretary, and Maurice Steenburgen, a freight-train conductor who worked at the Missouri Pacific Railroad. Steenburgen grew up in North Little Rock, Arkansas. Steenburgen married Malcolm McDowell in 1980 and they had two children together: Lily Amanda, born January 21, 1981 and Charles Malcolm born July 10, 1983, before divorcing in 1990, and has been married to actor Ted Danson since 1995.
In September 2005, she and Danson provided a guest lecture for students at the Clinton School of Public Service where they discussed their roles in public service as well as the foundations and causes in which they are involved. In 2006, Steenburgen received an honorary Doctor of Humane Letters degree from Lyon College in Batesville, Arkansas.
She is a close personal friend of former First Lady and Senator, United States Secretary of State Hillary Clinton, and supported Clinton's 2008 Presidential campaign along with her husband.
She splits her time living in California and Martha's Vineyard, in addition to sharing a condominium with Danson in the River Market District of Little Rock.