The precocious youngster began her acting career at the tender of seven and later played an abused child in an NYU student film, Helen Keller in a stage production of "The Miracle Worker" and a recurring role on the Nickelodeon series "The Adventures of Pete and Pete". Following her acclaimed debut, Matarazzo accepted a recurring role on the short-lived ABC sitcom "Townies" (1996) as Jenna Elfman's younger sister and took supporting roles in two flicks that starred "Dollhouse"'s Brendan Sexton, "Arresting Gena" (1997) and "Hurricane Streets" (1998). She offered a strong turn as a witness testifying in a murder trial in scenes with Keanu Reeves in "The Devil's Advocate" (1997) and registered in the brief role as the younger sister of the ambitious Shane O'Shea (Ryan Phillippe) in "54" (1998). Matarazzo was also among the ensemble of the female-driven "Strike!/The Hairy Bird" (1998), a coming-of-age tale set at an all-girls school in the early 1960s. Her performance as a bulimic won her praise, but the film itself was the subject of some controversy: its producers were unhappy with Miramax's decision to open it only in Seattle and sought other distribution. Those problems, however, had little effect on the young actress' career as she lent her quirky, unselfconscious charms to "Cherry" and "Getting to Know You" (both 1999), adapted from the short stories of Joyce Carol Oates.
After a brief stint on television as Eric Close's daughter on the short-lived but critically admired drama "Now and Again" (1999), Matarazzo enjoyed supporting roles in "Blue Moon" (2000), "Scream 3" (2000) and "Company Man" (2000) before landing another high-profile role as Anne Hathaway's Plain Jane buddy Lilly in the popular Cinderella story "The Princess Diaries" (2001), a role she reprised for the 2004 sequel. After a small but well-acted role in the dim-witted comedy "Sorority Boys" (2002) as one of the ugly duckling sisters in a sorority where college cads are disguised as women, Matarazzo again took on a merry nerd role in the religious satire "Saved!" (2004) as a desperately sociall-climbing Christian school student.