Ashwathy Kurup was born as second among three children to Ramachandra Kurup and Padma Bai in Kaviyoor, Thiruvalla. Her father is from Champakulam, Alappuzha and her mother is from Kaviyoor, Thiruvalla. She has an elder sister Jyothi and a younger sister Deepthi (deceased). She had her primary education at Devaswom Board Higher Secondary School, Thiruvalla. Her mother was a maths teacher at the same school she studied at. She pursued a Pre-degree from NSS Hindu College, Changanassery. This was where she was discovered by director Lenin Rajendran, who cast her in the lead role in his film. This film was shelved and was never released. She then acted in her first movie Vivahitare Itihile (1986), directed by Balachandra Menon at the age of 16.

Parvathy met her future husband Jayaram on the set of Aparan, at Udaya Studio in Alappuzha, in 1988. After her marriage on 7 September 1992, Parvathy stopped acting and later said that she has no regrets. "One spouse has to sacrifice their career, otherwise, it will be difficult to bring up the children properly. If there is a good salary earned by the husband why should the wife work?"^[4]

The couple have two children, Kalidas Jayaram and Malavika. Kalidas Jayaram won the National Film Award for Best Child Artist for his work in the film Ente Veedu Appuvinteyum (2003), in which he acted in along with his father, Jayaram.^[5] Currently, she resides at Valasaravakkam, Tamil Nadu with family.