Daughter of a cross-country skiing coach, Chepalova started to ski as soon as she began to walk. Coached by her father, Anatoly Chepalov, Yuliya made her debut in 1986 and continued to move upward through the old Soviet system (and later Russian, following the collapse of the Soviet Union in late 1991). Chepalov, a coach of the Russian junior national team, reportedly sold off all of his assets to help finance his daughter's career. Chepalova is currently affiliated with Dynamo Moscow, lives in Syktyvkar with her second husband, Vassili Rotchev and her daughter Olesya, and their daughter Vaselina who was born in February 2007; works as a sports instructor, and speaks fluent Russian and some German.
Debuting on the FIS cross-country circuit in the 1995–1996 season, Chepalova has continually ranked in the Top 15 throughout her career (the lone exception is the 2002–2003 season, where she took maternity leave to have her daughter Olesya), finishing #1 overall in 2000–2001 (#3 in 2005–2006 with #1 in the distance category (greater than 5 km)). This includes success at the FIS Nordic World Ski Championships, with golds in the 4×5 km (2001) and 7.5 km + 7.5 km double pursuit (2005), silvers in the 4×5 km and 10 km freestyle (both 2005), and bronzes in the Individual sprint (2001) and Team sprint (2005). Additionally, Chepalova has won the women's 30 km at the Holmenkollen ski festival three times (1999, 2004, and 2006), joining fellow Russian cross-country skier Larisa Lazutina as the only three-time winners of the event. She earned the Holmenkollen medal in 2004.
At the 1998 Winter Olympics, Chepalova won the women's 30 km freestyle event in her Olympic debut, becoming the youngest winner of that event (and in women's cross country skiing). Four years later at the 2002 Winter Olympics, Chepalova won a complete set of medals with gold in the Individual sprint, silver in the 10 km classical, and bronze in the 15 km freestyle. At the Winter Olympics in Turin, Chepalova would win two more medals with a gold in the 4×5 km and a silver in the 30 km freestyle mass start.
Chepalova was absent from the cross country skiing World Cup for the 2006–2007 season to pregnancy.
She tested positive for EPO during an in-competition doping control on 3rd January 2009 in Val di Fiemme (ITA). She was banned from competition for two years after this. 
Immediately after the EPO test results went public her father and coach Anatoly Chepalov officially announced her retirement. On November 29 2009 Chepalova addressed IOC President Jacques Rogge where she came down hard on WADA accusing this organisation of being biased and unscrupulous in general, of unlawful ruling of her case in particular, and of "severing the career" of many good athletes but all the efforts to restore her good name were of no avail. Following this in December 2009 Chepalova ostracised Russian Olympic Committee President Leonid Tyagachyov and Ski Federation of Russia President Vladimir Loginov for their inaction in matters of defending the sportsmen whose guilt is not yet proven.