Waheeda was born in a muslim family in Hyderabad, India, on May 14, 1936। Year after her dad's death she acted in a Telegu movie 'Rojulu Marayi'. Her role was as an dancing child artiste. It was here that she was spotted by noted Bollywood actor and film-maker, Guru Dutt, who gave her a lead role in C.I.D. She was also proficient in Bharat Natyam.

Gurudutt being mesmerized by her beauty and talent, casted her in all of his films। Thus, Rehman gave a mesmerizing performance in Pyaasa (1957) as Gulab, the prostitute with a heart of gold, and she stole the hearts of audiences as Jameela, a shy Muslim girl in the romance Chaudhvin Ka Chand (1960)। But by then she was involved in an affair with Guru Dutt and this affair led to the disintegration of Dutt's marriage - and soon the two of them broke apart after their last collaboration, Sahib Bibi Aur Ghulam (1962) (which was in fact done under some strain on Rehman's part)। Their ill-fated romance was portrayed in the semi-autobiographical _Kaagaz Ke Phool (1960)_. Guru Dutt, unable to completely forget her, committed suicide in 1964.

Some of her classical work include:
C.I.D (1956), Pyaasa (1957), Solva Saal (1958), Kaagaz ke Phool (1959), Chaudhavin ka Chand
(1960), Kala Bazaar (1960), Bees Saal Baad (1962), Sahib Bibi Aur Ghulam (1962), Mujhe Jeene Do
(1963), Kohra (1964), Guide (1965), Teesri Kasam (1966), Ram Aur Shyam (1967), Neel Kamal
(1968), Khamoshi (1969), Reshma Aur Shera (1971), Kabhi Kabhie (1976)