McCarthy graduated in dramatic arts at HB Studio in Greenwich Village, New York City. She began her acting career in 1982. She had recurring roles on the television series Picket Fences and Little Mosque on the Prairie.
Film credits include I've Heard the Mermaids Singing and The Lotus Eaters which earned her Genie awards in 1987 and 1993 respectively, Paradise, Bright Angel, Being Julia and Antiviral.
McCarthy married actor Peter Donaldson (1953-2011) in 1986 with whom she had her daughters Drew and MacKenzie. Both Peter and MacKenzie Donaldson have had recurring roles on the Emily of New Moon series.