She attended Oyster Bay High School, as well as the Boards of Cooperative Educational Services Cultural Arts Center High School.
Her breakthrough role was as a geeky girl in the film Welcome to the Dollhouse (1995). She played Lilly in The Princess Diaries (2001) and The Princess Diaries 2: Royal Engagement (2004). Her other movies include The Devil"s Advocate (1997), Scream 3 (2000), Sorority Boys (2002), Saved! (2004), and Hostel: Participant 2 (2007).
Matarazzo is of Irish descent, and was adopted and raised by the Matarazzos, a strict Catholic Italian American family.
Matarazzo began acting at the age of six. After commandeering the microphone at an Acquired Immune Deficiency Syndrome benefit for children, she was given the card of a talent manager with whom she remained for ten years.
Matarazzo has expressed pleasure in being allowed to play interesting characters, some of whom "are ostracized for various reasons." She has commented that she is most proud of her performance in 1999"s Our Guys: Outrage in Glen Ridge, in which she played a mentally challenged girl who is raped by football players. In 1999 to 2000 she portrayed Heather Wiseman in the short-lived television series, Now and Again.
Matarazzo has made appearances on several hit television shows including Roseanne, Law & Order, The L Word, "Greys Anatomy" and Strangers With Candy.
Matarazzo starred opposite Thaao Penghlis in the world premiere of Charles Evered"s play Class at Cape May Stage in Cape May, New Jersey in May and June 2010. In 2011, Matarazzo announced that she would begin working on her directorial debut, a television series to be based on a memoir by author Diane Hanks, titled Summer Camp: A Memoir. Matarazzo is openly lesbian.
On July 31, 2008, Matarazzo"s publicist announced that Matarazzo was engaged to musician Caroline Murphy.
She was the keynote speaker at the Gay, Lesbian and Straight Education Network of Boston"s annual conference. In 2012, popular media news outlets announced that Matarazzo and Murphy had split amicably.
Matarazzo revealed that she was scheduled to be at a meeting on the 15th floor of One World Trade Center on September 11, 2001, shortly after the attacks occurred.