Rivlin is daughter of the physicist Allan C. G. Mitchell and granddaughter of the astronomer Samuel Alfred Mitchell.

Rivlin is an alumna of the Madeira School, earned a B.A. at Bryn Mawr College in 1952 and earned a Ph.D. from Radcliffe College in 1958. She has been affiliated several times with the Brookings Institution, including stints in 1957–66, 1969–75, 1983–93, and 1999 to the present. She is currently a visiting professor at the Georgetown Public Policy Institute.

She was appointed by President Lyndon Johnson as Assistant Secretary for Planning and Evaluation, United States Department of Health, Education, and Welfare from 1968 to 1969. In 1971 she authored Systematic Thinking for Social Action.

She was the first director of the newly established Congressional Budget Office during 1975–83, where she was a persistent and vociferous critic of Reaganomics as head of the CBO. In 1983, she won a MacArthur Foundation "genius" award.

Under President Bill Clinton she served as the deputy director of Office of Management and Budget from 1993 to 1994, director of OMB from 1994 to 1996 (becoming the first woman to hold the Cabinet-level position), and a governor of the Federal Reserve from 1996 to 1999, during which time she served as the Fed's vice-chair. She was also chair of the District of Columbia Financial Responsibility and Management Assistance Authority from 1998 to 2001.

Rivlin and former Senator Pete Domenici (R-NM) were named in January, 2010 to chair a Debt Reduction Task Force, sponsored by the Bipartisan Policy Center in Washington, D.C..

Rivlin soon thereafter was named by President Obama to his 18-member commission, a bipartisan panel chaired by former Senator Alan K. Simpson, (R-WY), and former White House Chief of Staff Erskine Bowles (D). The balance of the panel is three more members appointed by the President, six members of the U.S. House of Representatives, and six members of the U.S. Senate. The commission first met on April 27, 2010 and has a December report deadline. A health-care component of the overall U.S. federal and state fiscal-management challenge was addressed by a panel including Rivlin on the Diane Rehm Show in June.