Heller was born in Brooklyn, New York City, and grew up in West Hempstead, New York, on Long Island, of Russian Jewish heritage. After initially attending Emerson College in Boston, she returned to Long Island to graduate in 1969 from Adelphi University, where she studied theater.
The summer after graduation, she was cast in an Off-Broadway production of Godspell. She went on to do the Broadway musical Grease, playing Rizzo. In 1978, Heller moved from New York to California to pursue screen work.
Her role as Alice, one of the television's first lesbian characters, on the TV series Soap received mixed reviews, with criticism primarily directed not at her acting but at the stereotyping of her character. The Boston Herald said that the characterization shows how "the networks have generally depicted lesbians either as suicidal losers or sexual predators." For example, it identifies Alice as "TV's first recurring lesbian character," noting that she "first tries to throw herself off a bridge, then falls for Jodie (Billy Crystal), a confused gay man, and finally runs off.". Ahead of filming, producers ordered Heller's newly permed hair straightened at the network's insistence. Of a later episode in which Alice introduces her girlfriend, Heller said, "I went to kiss her in rehearsals and they said, 'No no no … you can’t do that.' I said, 'But she’s my girlfriend!' 'No, no no no, we can’t do that, we just cannot do that.' So it was so careful, it was so delicate in those days that you couldn’t really do your thing. … They wanted me to be a heterosexual homosexual." Heller would appear as a lesbian character again in a 2010 episode of Grey's Anatomy "Almost Grown," playing the partner of a female patient with a brain tumor.