Hollywood
Otto's first Hollywood role was the suspense thriller What Lies Beneath in 2000. She played Mary Feur, a mysterious next-door neighbour.
In 2001, she was cast as a naturalist in the comedy Human Nature. Writer Charlie Kaufman, impressed by her audition two years earlier for his film Being John Malkovich, arranged for Otto to audition and meet with the film's director Michel Gondry. Critic Jeffrey M. Anderson criticised Otto's French accent and wrote that she "doesn't seem to mesh with what's going on around her".
Also in 2001, Otto appeared in the BBC adaptation of Anthony Trollope's The Way We Live Now, as a strong-willed American Southerner.
In 1999, Otto was cast as Éowyn in The Lord of the Rings film trilogy, after Uma Thurman turned down the role. Director Peter Jackson cast her immediately after viewing the audition video she had filmed in Australia. For the role, Otto spent six weeks learning stunt choreography and horse riding. Otto's character was introduced in the trilogy's second film The Lord of the Rings: The Two Towers in 2002 and appeared in the third film, The Lord of the Rings: The Return of the King, the following year. The Lord of the Rings trilogy was a critical and financial success, and the third film won the Academy Award for Best Picture in 2004. Otto's performance earned her an Academy of Science Fiction, Fantasy & Horror Films nomination for Best Supporting Actress.
Otto's next project was playing the lead in the Australian film Danny Deckchair (2003). She then took on the Australian television miniseries Through My Eyes: The Lindy Chamberlain Story (2004). The film is a drama that portrays the story of Lindy Chamberlain, who was wrongfully convicted in 1982 of killing her baby daughter, Azaria, in one of the country's most publicized murder trials. Otto was cast as Chamberlain, and her husband, Peter O'Brien, was cast as prosecutor Ian Barker. She was drawn to the role because it provided her with the "prospect of exploring an unconventional character." At the 2005 Logie Awards, Otto won Most Outstanding Actress in a Drama Series for her role.Director Steven Spielberg, impressed by Otto's performance in The Lord of the Rings, called her to ask if she would play opposite Tom Cruise in the big-budget science fiction film War of the Worlds (2005). Otto, pregnant at the time, believed she would have to turn down the role, but the script was reworked to accommodate her. After giving birth to her daughter, she took a rest from films to concentrate on motherhood and theatre roles in Australia.
In 2007, Otto starred as Cricket Stewart, the wife of a successful director, in the television miniseries The Starter Wife. That same year, she was cast in the American television series Cashmere Mafia. In the series she plays Juliet Draper, a successful female executive who must rely on her friends to juggle the demands of a career and family in New York City. Otto chose to star in the series because "American television at the moment is so interesting and, particularly, the characters for women are so fantastic" and she "liked the idea of having a character over a long period of time and developing it." The series was cancelled in May 2008.
In 2013, Otto played the role of American poet Elizabeth Bishop opposite Glória Pires in Brazilian director Bruno Barreto’s Reaching for the Moon.
In 2015, Otto played Alison Carr, the CIA's Berlin station chief, in the fifth season of the American spy thriller series Homeland.
Otto starred opposite Stephanie Sigman and Anthony LaPaglia in the horror prequel Annabelle: Creation, directed by David F. Sandberg. The film was released on 12 August 2017. She portrayed Zelda Spellman in Netflix's Chilling Adventures of Sabrina (2018–2020).
On 31 May 2020, Otto joined Josh Gad's YouTube series Reunited Apart, which reunites the cast of popular films through video-conferencing and promotes donations to non-profit charities, with her fellow Lord of the Rings cast and crew members.
On 13 November 2023, Otto was announced for ABC drama series Ladies In Black. In 2024, Otto reprised her role as Éowyn from Peter Jackson's The Lord of the Rings film series in the anime fantasy film The Lord of the Rings: The War of the Rohirrim, a prequel directed by Kenji Kamiyama, to which she served as the narrator.