The actress and her then-boyfriend Matthew Broderick were involved in a head-on collision that left the occupants of the other car, a mother and daughter, dead.
The pair had already found fame as co-stars in Ferris Bueller's Day Off, but Grey was about to land her big break with the release of Dirty Dancing, which hit movie theatres just days after the accident.
She tells People magazine, "One minute we're going down the road and music is playing, and the next minute... it's all different. I couldn't be fearless after that.
"I became America's sweetheart within five days of the accident."
But Grey couldn't enjoy her sudden fame. She adds, "The juxtaposition of that deep sorrow, the survivor's guilt, and then being celebrated as the new big thing just didn't jibe. It didn't feel good to be the toast of the town."
And she admits she never recovered from the trauma, effectively turning her back on showbiz at the age of 27: "My head was never the same, my ambition was ever the same."
Grey has made just a few minor movie and TV appearances since Dirty Dancing, but has returned to the small screen in the latest season of Dancing With the Stars, which kicked off in America on Monday (20Sep10).