Parveen Babi was born in the princely state of Junagadh and attended a school in Aurangabad before taking admission in St. Xavier's College, Ahmedabad. Her father was a gujarati Muslim named Vali Mohammed Babi who was in the employment of the Nawab of Junagadh. She was the only child of her parents.
Parveen Babi became one of the most successful actresses f her times, in the 1970s. She was famous for her flamboyant portrayal of confident unconventional women who refused to be tied to the ramshackles of social norms. In 1975, she became the first Indian actress to appear in the cover of the Time Magazine. She made an immensely successful pair with the screen legend Amitabh Bachchan, with whom she worked in several major hit films. Even though she did not have meaty roles in movies like Deewar (1975), Shaan (1980) and Namak Halaal (1982), but her sizzling dance numbers added glamour to the films. The foot-tapping dance numbers in which she featured, like “Jawani Janeman Haseen Dilruba” or “Raat Baki Baat Baaki”, continue to bewitch the audience till date. The media hyped an alleged contention between Parveen and her contemporary Zeenat Aman, who was in many ways similar to her in Weternized appearance and attitude. Babi also tried her hand at out of the ordinary cinema like Vinod Pandey's Yeh Nazdeekiyan (1982).
Parveen Babi never got married. She was reportedly involved with director Mahesh Bhatt and actors Kabir Bedi and Danny Denzongpa. Mahesh Bhatt made two semi-autobiographical films, Arth (1982), and Woh Lamhe (2006) based on her real life relationship with Babi.
Her success waned in the eighties. She quite films and left for New York in search of spiritual pursuits when she became associated with the religious philosopher U. G. Krishnamurti. In 2002 she came back to Mumbai, a shadow of her former self, having put on a lot of weight to the point that she had become almost unrecognizable. At about this time, she may have fallen into the clutches of the mental disorder schizophrenia. She alluded at a conspiration for her murder and accused several foreign dignitaries as well as her former co-star and friend, Amitabh Bachchan,for being a part of the scheme. She even moved to court but her petition was dismissed due to absence of verification. In a special court hearing with the claim that she was in possession of evidence regarding the 1993 serial blasts case, but violated the summons of the court but failing to show up, declaring that she was afraid of being murdered .
Parveen Babi spent the last few years of her life in seclusion. The secretary of her residential society complained to the police that she was not collecting her milk bottles and newspapers. The police found her dead in her flat on 20th January, 2005. They ruled out any possibility of foul play and declared that death was due to a gangrene of the foot, a complication arising from her diabetic condition. She was buried following last rites specified by Islamic religion, in Santa Cruz, next to her mother.