Kihlstedt was born in Lancaster, Pennsylvania and is a 1991 graduate of Skidmore College in Theatre Arts. She is of Swedish descent. In 1994, Kihlstedt married actor Gil Bellows They have two children, Ava Emanuelle (born 1999), and Giovanni (born 2001). She is the sister of Oakland-based violinist, Carla Kihlstedt.
In 1995, Kihlstedt played Lizzie Elmsworth in the BBC adaptation of Edith Wharton's last novel, The Buccaneers. However, she is best known for her role as Alice Ribbons, one of the criminals in the comedy Home Alone 3 (1997). In 1998, she starred with Peter Gallagher in the TV movie Brave New World loosely based on Aldous Huxley's 1932 novel of the same name.
She had recurring roles in the Showtime crime drama Dexter as Dr. Michelle Ross, and in the ABC musical drama Nashville as Marilyn Rhodes, a powerful record producer. From 2015 to 2016, she starred as Erica Kravid in the short-lived NBC science fiction drama miniseries Heroes Reborn.
Kihlstedt's other notable television credits include Early Edition, Criminal Minds, NCIS and Once Upon a Time, and her other film credits include supporting roles in Arctic Blue, Deep Impact, Jaded and Women in Trouble.