Williams kicked off her career in the early 1990's by making guest appearances on numerous TV programs. In 1993, she appeared as Bridget Bowers in Baywatch. She moved to Los Angeles and quickly secured a role in Dawson's Creek. Williams said later that she thought she knew all she needed to know since age 15. She said in 2011 that she chose emancipation as she was influenced by other young actors doing it. In 1997, unhappy with the roles they were being offered, Williams and several actor friends wrote a script entitled Blink. It was sold, but nothing happened to it.
In the 2000's, she appeared in the HBO television movie sequel If These Walls Could Talk 2 (2000). Presented in three segments, it follows lesbian couples in different time periods. In 2005, she appeared in Imaginary Heroes, about the effect of a son's suicide on his suburban family. It made less than $300,000 worldwide in ticket sales. She co-starred with Meat Loaf, as an impressionable young woman fixated on mental health in A Hole in One, a period piece that was the 2005 feature film debut of Richard Ledes, and was generally ignored.
In 2010, Martin Scorsese cast her as the dead wife who haunts marshal Teddy Daniels (Leonardo DiCaprio) in Shutter Island, a psychological thriller based on Dennis Lehane's 2003 best-selling novel of the same name. It was released on February 19, 2010. With $41.1 million in ticket sales at over 2,900 locations, Shutter Island gave Williams her widest release and best opening weekend stats. In December 2010 she appeared with Ryan Gosling as a struggling married couple in the romantic drama Blue Valentine.
Williams co-starred with James Franco in Walt Disney Pictures's Oz the Great and Powerful, a 3-D prequel of The Wizard of Oz, released March 8, 2013, in which she played Glinda the Good Witch. She has signed to do a sequel to the film. Williams made her Broadway debut in the revival of Cabaret, in the role of Sally Bowles. The production opened on April 24, 2014 and she ended her run on November 9, 2014.
In 2016, Williams starred in a Broadway revival of the David Harrower play Blackbird, for which she received a Tony Award nomination. Also that year, she had major roles in the films Certain Women and Manchester by the Sea, both of which premiered at the 2016 Sundance Film Festival. Manchester in particular earned her wide praise, with film critic Tom Shone saying, "If this actress were put on earth to do one thing only, it would be this." Williams received the New York Film Critics Circle Award for Best Supporting Actress for both performances. She was nominated for the Academy Award for Best Supporting Actress for her role in Manchester by the Sea.
Williams is the face of handbag and jewelry manufacturer Louis Vuitton. In July 2013, she became the new face of Louis Vuitton handbags, then became the face of Louis Vuitton Jewellery collection, then in 2016 the face of the sunglasses collection.