Arquette has appeared in both television and screen films. In 1982, she earned an Emmy Award nomination for the TV filmThe Executioner's Song. Arquette's first starring role was in John Sayles's Baby It's You, a highly regarded but little seen film. She starred in Desperately Seeking Susan (1985) alongside pop singer Madonna, for which she won a British Academy Film Awards (BAFTA) for her "supporting" role despite her clearly being the lead. Madonna was breaking out at the time and though many feel that while Arquette's performance was central to the movie's success, Madonna made the movie into a mainstream hit. She had negotiated a deal where she would provide a song for the movie. "Into The Groove" became a huge hit for Madonna as did the movie itself. In an interview at the time, Arquette said "The two questions I hate the most are 'What was it like working with Madonna?' and 'Are you the Rosanna in the song 'Rosanna'?" Following the commercial and critical success of Lawrence Kasdan's Silverado in 1985, and the failure of both After Hours and 8 Million Ways to Die, she quit Hollywood to work in Europe where she acted in Luc Besson's The Big Blue (1988).
In 1989, director Martin Scorsese offered her a part in New York Stories. Other movies of note are Pulp Fiction and the David Cronenberg film, Crash and the Australian film Wendy Cracked a Walnut (1990) (also known as …Almost). In 1990, Arquette appeared on the cover and in a nude pictorial in Playboy's September issue, although she claimed it was without her prior knowledge or consent.
In recent years, Arquette has expanded into directing, including the documentaries Searching for Debra Winger (2002) and All We Are Saying (2005); she also produced both projects.
In August 2013, Arquette married her fourth husband, investment banker Todd Morgan, following a two-year engagement. Her previous marriages, to director Tony Greco, musical composer James Newton Howard, and restaurateur John Sidel, all ended in divorce. She has one daughter, Zoe Bleu (born 1994), with Sidel.