Her father was an aeronautical engineer and her mother a music teacher. She grew up in a liberal household in which each member was allowed to follow their own inclination. Iciar and her twin sister Marina shown an early interest in the arts that would later lead Iciar towards filmmaking while her sister would choose a career in the opera. At the age of fourteen, she was cast in Víctor Erice's film El Sur (1983). Since then Icíar Bollaín has acted in fourteen films. With her twin sister Marina she was cast by their uncle Juan Sebastián Bollaín in two films Las dos orillas (1987) and Dime una mentira (1992). She also took roles in films directed by Felipe Vega, Manuel Gutiérrez Aragón and José Luis Borau. Her red hair led Ken Loach to give her a role in his film Land and Freedom (1995) about the Spanish Civil War. Her experience working with Loach led her to write the book: Ken Loach: un observador solitario.
She formed her production company La Iguana and made two short films: Baja Corazón (1992) and Los Amigos del muerto (1994). With support from Fernando Colomo she made her her first feature film as director: Hola, ¿estás sola? (Hi, are you alone? in English) (1995), a story about two young girls who dream of finding an earthly paradise, and undertake a long trip towards the sea.
Flores de otro mundo (Flowers from another world in English) (1999) was her second feature film, which she co-wrote with Julio Llamazares. It is the story of three women who travel to rural Spain with the hopes of finding love.
Her film Te Doy Mis Ojos (Take My Eyes) (2003) won seven Goya Awards, including Best Film. The movie is about the abusive marriage relationship between Pilar and Antonio.