Williams's career began in television, appearing in programs such as the 1990s version of Lassie, Baywatch, Step by Step, and Home Improvement. Williams' first film role was in the motion picture Species. Soon after, she won additional roles, including the Jessica Lange-Michelle Pfeiffer film A Thousand Acres and the 1998 movie Halloween H20: 20 Years Later with Joseph Gordon-Levitt and Josh Hartnett. Williams's star profile rose considerably when in 1998, she was cast as one of the lead characters on the WB show Dawson's Creek. She would play Jen Lindley for all six seasons of the successful show. During and after Dawson's Creek's run, Williams made strong turns in several notable indie films. Her first starring role was as Arlene in the film Dick, a satire of the Watergate scandal, opposite Kirsten Dunst. She starred opposite Christina Ricci in Prozac Nation, and also appeared in the HBO film If These Walls Could Talk 2, and several acclaimed indie pictures such as The United States of Leland, Me Without You, and Imaginary Heroes with Sigourney Weaver. For her performance in The Station Agent, Williams along with the rest of the cast received a Screen Actors Guild award nomination for Best Acting Ensemble. In 2005, critics and audiences took note of Williams' performance in Ang Lee's Brokeback Mountain. For her performance, she won a Critic's Choice Award and received Golden Globe, BAFTA, and Academy Award nominations for Best Supporting Actress.

In 2006 she appeared in The Hawk Is Dying with Paul Giamatti. In 2007, she was in The Hottest State opposite Ethan Hawke; and in the Todd Haynes directed I'm Not There with Cate Blanchett, Richard Gere, Heath Ledger, and Julianne Moore. In 2008, she starred with Ewan McGregor and Hugh Jackman in the Marcel Langenegger directed film Deception. Williams has been noted to "repeatedly taken chances on under-the-radar indies", such as The Station Agent and The Hawk Is Dying, "while catching the attention of auteurs like Wim Wenders ("Land of Plenty"), Todd Haynes ("I'm Not There"); and Martin Scorsese's Ashecliffe (formerly entitled the same as the novel it adapts, Shutter Island by Dennis Lehane)— that will also star Leonardo DiCaprio and Mark Ruffalo.

Along with the Scorsese film, she shot four other films in succession. Independent filmmaker Kelly Reichardt's Wendy and Lucy was shown on September 27 and 28, 2008 at the New York Film Festival and opened on December 10, 2008. Williams appears "in every scene as a young woman living hand to mouth on the road when her car breaks down and her dog goes missing in a blue-collar Oregon town. She is one of a "vivid ensemble cast orbiting around Philip Seymour Hoffman's harried theater director" in Synecdoche, New York, the first film directed by Charlie Kaufman, the screenwriter of Adaptation. Two other films include director and Swedish provocateur Lukas Moodysson's Mammoth with Gael García Bernal; and Incendiary, which premiered at the Sundance Film Festival in 2008. Williams recently said that she is "going to take a year off" as she "stopped feeling creative a little while ago, and ... just realizing it now," and is also "feeling the strain of being a working single mom".

• Shutter Island (2009) (post-production) .... Dolores Chanal
  
• Mammoth (2009) .... Allison Gould
  ... aka Mammut (Denmark) (Sweden)
• Synecdoche, New York (2008) .... Claire Keen
• Wendy and Lucy (2008) .... Wendy
• Deception (2008/I) .... S
• Incendiary (2008/I) .... Young Mother
• I'm Not There. (2007) .... Coco Rivington
  ... aka I'm Not There (Germany) (USA: poster title)
• The Hottest State (2006) .... Samantha
• The Hawk Is Dying (2006) .... Betty
• Brokeback Mountain (2005) .... Alma
  ... aka Souvenirs de Brokeback Mountain (Canada: French title)
• The Baxter (2005) .... Cecil Mills
• Land of Plenty (2004) .... Lana
• Imaginary Heroes (2004) .... Penny Travis
• A Hole in One (2004) .... Anna Watson
• "Dawson's Creek" .... Jen Lindley (128 episodes, 1998-2003)
       - All Good Things... (2003) TV episode .... Jen Lindley
       - ...Must Come to an End (2003) TV episode .... Jen Lindley
       - Joey Potter and Capeside Redemption (2003) TV episode .... Jen Lindley
       - Goodbye, Yellow Brick Road (2003) TV episode .... Jen Lindley
       - Catch-22 (2003) TV episode .... Jen Lindley
        (123 more)
• The Station Agent (2003) .... Emily
• The United States of Leland (2003) .... Julie Pollard
• Prozac Nation (2001) .... Ruby
• Me Without You (2001) .... Holly
  ... aka Meine beste Freundin (Germany)
• Perfume (2001) .... Halley
  ... aka Dress to Kill (USA: video title)