Williams was born in Van Nuys, a modest suburban area of Los Angeles' San Fernando Valley. She made her first TV appearance on an episode of "Room 222" (ABC) in 1969 and another appearance on the show during the next season. By 1971, she had landed her first series, "The Funny Side" (NBC), doing sketch segments teamed with Michael Lembeck as a counter-culture young couple. Williams made two appearances on "Happy Days", the hit ABC series, in 1975 and the following year, ABC and the partnership of Tom Miller, Ed Milkis and Garry Marshall turned her character of Shirley Feeney and that of Laverne DeFazio (played by Marshall's sister, Penny) into "Laverne & Shirley", roommates working at a brewery hoping to find happiness and spouses. The sitcom went on to become the number one show on TV and helped propel the network to the top of the ratings. But it also spawned constant column and tabloid reports that Williams and Penny Marshall were feuding, that their agents were counting the lines their clients had, that Williams felt Marshall was "management" because her brother was executive producer, and her father and sister were also involved as producers on the show. Whatever the truth to all the backstage tales, the magic created by Williams and Penny Marshall on the small screen was real. Williams also provided the voice of Private Shirley Feeney as a private in the animated ABC series "Laverne & Shirley in the Army" (1981-82).

After leaving the series, Williams concentrated on her marriage to actor-musician Bill Hudson and the birth of their first child. Together, they starred in the 1986 ABC TV-movie "Help Wanted: Kids", about an ambitious couple who rent a boy and a girl to create a family for business purposes. In 1989, the concept was turned into a sitcom series for The Disney Channel, but did not last long. The following year, Williams was on the short-lived CBS series "Normal Life", as mother to Dweezil and Moon Unit Zappa. She again tried sitcoms with "Getting By" (NBC, 1993-94), in which she and Telma Hopkins merged their single-parent families together to try to save money.

Williams has worked sporadically in TV-movies, including her debut in the genre "The Migrants" (CBS, 1974). She played a suburban mother who plots homicides with other mothers in "Menu for Murder" (CBS, 1990) and was one of the wives who want perfect spouses in "The Stepford Husbands" (CBS, 1996). Similarly, Williams' big screen career has not been extensive, but she has appeared in several films that earned critical acclaim and audience longevity. As a child, she had a small role in "The Blob" (1958) but did not have her first real acting role until "Gas-s-s!" (1971). Among her better-known roles are the hippie who takes some of the stuffiness out of Maggie Smith's nephew in "Travels With My Aunt" and Richard Dreyfuss' sister whose night with boyfriend Ron Howard is chronicled in "American Graffiti", a role she reprised in 1979 with "More American Graffiti". Williams had a key role in Francis Ford Coppola's "The Conversation" (1974), playing one of the pair Gene Hackman is supposed to track and then realizes is a killer. Other feature films have been far frothier, such as the forgettable "The First Nudie Musical" (1976) and "Bingo!" (1991), in which she is the mother of a boy who will do anything to own a dog. In 1996, she played the wife of a governor on Rodney Dangerfield's talk-show send-up, "Meet Wally Sparks". Williams also served as co-producer of (but did not appear in) both the 1991 Disney remake of "Father of the Bride" and its 1995 sequel. In an appearance on "The Charles Grodin Show" on CNBC following a 1995 "Laverne & Shirley Reunion", Williams and Penny Marshall pledged eternal camaraderie and scoffed at the reports from almost two decades earlier of ongoing strife on the set of the series. A potential feature film version of the sitcom was put into development by Marshall's company with Williams fully involved.