Baxter was born in Michigan City, Indiana, to Kenneth Stuart Baxter and Catherine (née Wright), whose father was the famed architect Frank Lloyd Wright. Kenneth Baxter was a prominent executive with the Seagrams Distillery Co. and she was raised in New York City, where she attendedBrearley. At age 10, Baxter attended a Broadway play starring Helen Hayes, and was so impressed that she declared to her family that she wanted to become an actress. By the age of 13, she had appeared on Broadway. During this period, Baxter learned her acting craft as a student of the famed teacher Maria Ouspenskaya.
At 16, Baxter screen-tested for the role of Mrs. DeWinter in Rebecca, losing to Joan Fontaine because director Alfred Hitchcock deemed Baxter too young for the role, but she soon secured a seven-year contract with 20th Century Fox. Her first movie role was in 20 Mule Team in 1940. She was chosen by director Orson Welles to appear in The Magnificent Ambersons (1942). Baxter co-starred with Tyrone Power and Gene Tierney in 1946's The Razor's Edge, for which she won the Academy Award for Best Supporting Actress. Baxter later recounted that The Razor's Edgecontained her only great performance which was a hospital scene where the character, Sophie, "loses her husband, child and everything else". She said she relived the death of her brother, who had died at age three. She played Mike in the 1948 Western film Yellow Sky with Gregory Peck and Richard Widmark.
In 1950, Baxter was chosen to co-star in All About Eve, largely because of a resemblance to Claudette Colbert, who was originally set to star in the film, but dropped out and was replaced by Bette Davis. The original idea was to have Baxter's character gradually come to mirror Colbert's over the course of the film. Baxter received a nomination for Best Actress for the title role of Eve Harrington. She said she modeled the role on a bitchy understudy she had for her debut performance in the Broadway play Seen But Not Heard at the age of thirteen and who had threatened to "finish her off". Through the 1950s she continued to act on stage. In 1953 Baxter contracted a two picture deal for Warner Brothers. Her first was opposite Montgomery Clift in Alfred Hitchcock's I Confess; the second was the whodunit The Blue Gardenia as a woman accused of murder.
Baxter is also remembered for her role as the Egyptian Queen Nefertari opposite Charlton Heston's portrayal of Moses inCecil B. DeMille's award winning The Ten Commandments (1956). She appeared regularly on television in the 1960s. She did a stint as one of the What's My Line? "Mystery Guests" on the popular Sunday night CBS-TV quiz program. She also starred as guest villain "Zelda the Great" in two episodes of the superhero show Batman. She appeared as another villain, "Olga, Queen of the Cossacks", opposite Vincent Price's "Egghead" in three episodes of the show's third season. She also played an old flame of Raymond Burr on his crime series Ironside.
Baxter returned to Broadway during the 1970s in Applause, the musical version of All About Eve, but this time in the "Margo Channing" role played byBette Davis in the film (succeeding Lauren Bacall, who won a Tony Award in the role).
In the 1970s, Baxter was a frequent guest and stand-in host on The Mike Douglas Show, since Baxter and host Mike Douglas were friends. She portrayed a murderous film star on an episode of Columbo, called "Requiem for a Fallen Star". In 1971, she also had a role in Fools' Parade, as an aging prostitute who helps characters played by Jimmy Stewart, Strother Martin, and Kurt Russell escape from George Kennedy. In 1983, Baxter starred in the television series Hotel, replacing Bette Davis after Davis became ill.
In 1946, Baxter married actor John Hodiak. They had one daughter, Katrina, born 1951. Baxter and Hodiak divorced in 1953, which she later blamed on herself. He died one-and-a-half years later.
In 1960, Baxter married her second husband, Randolph Galt. Galt was the American owner of a neighboring cattle station near Sydney, Australia, where she was filming Summer of the Seventeenth Doll. She left Hollywood with Katrina to live with him on a remote 37,000 acres (150 km2) cattle station he bought 180 miles (290 km) north of Sydney called Giro (pronounced Ghee-ro). During this time, they had two daughters, Melissa (b. 1962) and Maginel (b. 1963). In 1976, Baxter recounted her courtship with Galt (whom she called "Ran") and their experiences at Giro in a well-received book called Intermission. After the birth of Maginel, back in California, Galt unexpectedly announced that they were moving to an 11,000 acres (45 km2) ranch south of Grants, New Mexico. They then moved to Hawaii (his home state) before settling back in Brentwood, Los Angeles, California. Baxter and Galt were divorced in 1969. Melissa Galt became an interior designer and then a business coach, speaker and seminar provider. Maginel became a cloistered Roman Catholic nun, reportedly living in Rome, Italy.
Baxter married again, in 1977 to David Klee, a prominent stockbroker. It was a brief marriage; Klee died unexpectedly from illness. The newlywed couple had purchased a sprawling property inEaston, Connecticut, which they extensively remodeled; however, Klee did not live to see the renovations completed. Baxter never remarried. Although she maintained a residence in West Hollywood, Baxter considered her Connecticut home to be her primary residence. Baxter was passionate about music, and was an active benefactor of The Connecticut Early Music Society.
Baxter was a long time friend of celebrated costume designer Edith Head, whom she first met on the set of All About Eve. Head appeared with Baxter in a cameo role in Requiem For A Falling Star, a 1973 Columbo episode. Upon Head's death in 1981, Melissa Galt, who was also a goddaughter of Head, was bequeathed Head's jewelry collection.
Baxter suffered a brain aneurysm on December 4, 1985, while hailing a taxi on Madison Avenue in New York City. She died 8 days later at Lenox Hill Hospital on December 12, aged 62.
Baxter is buried on the estate of Frank Lloyd Wright at Lloyd Jones Cemetery in Spring Green, Wisconsin. She was survived by her three daughters.
Baxter has a star on the Hollywood Walk of Fame at 6741 Hollywood Blvd.