Shahana Goswami was born in New Delhi. She attended Sardar Patel Vidyalaya, Delhi and Sophia College, Mumbai. Goswami was the house captain and sports champion in her school. She secured second position at the National Artificial Wall Climbing Competition and has represented her school in athletics, badminton, basketball and volleyball at the zonal level. She also trained in Odissi for 10 years under Guru Padmashri Kiran Segal and has travelled and performed extensively with her dance troupe.

Shahana had a single-minded focus on professional acting since childhood. She moved to Mumbai to complete her graduation and to explore the possibility of taking up acting as a career. In Mumbai, her first steps in acting were at Jaimini Pathak's theatre group Working Title. There, she started off as a production assistant and then acted in their productions of Seagull and Arabian Nights.

Through her theater circle she met talent consultant Shaanu Sharma who asked her to audition for a role in Naseeruddin Shah's directorial debut Yun Hota Toh Kya Hota. Subsequently, she stumbled upon the small role of Boman Irani's daughter in Reema Kagti's Honeymoon Travels Pvt. Ltd., when she visited the production house for some other work. Meanwhile, a cinematographer who noticed her work in Yun Hota Toh Kya Hota recommended her and she auditioned for the lead role in Percept Picture Company's Ru Ba Ru, directed by Arjun Bali, with Randeep Hooda as her co-star. For Goswami, Ru Ba Ru happened while she was still in college completing her graduation. She gave her first shot for the film in Bangkok, much before she was signed on for Rock On!!.

Her friends Shaanu Sharma and Simran, who were in the middle of casting for Rock On!!, at that time suggested her name to the film's director, Abhishek Kapoor. Later, she auditioned for the film and got her big break in the role of Debbie. Her performance not only secured her a prominent spot on the Bollywood map, but also fetched her many awards, the most prestigious of them being the Filmfare Best Actress (Critics) award, which no supporting actress had won until then.

She then appeared in the music video for Dido's Let's Do the Things We Normally Do as a taxi driver in Mumbai. The video was shot by Siddharth Sikand. In between, she also featured in a Fevicol commercial set in a village in Rajasthan.

Goswami's first international project was Deepa Mehta's Midnight's Children, an adaptation of Salman Rushdie's Booker Prize winning novel. The film released in 2013.

Shahana also featured in the Chivas Studio 2011-12, which was held in Delhi and Mumbai in November and December 2011.

Shahana plays the female lead in Vara: A Blessing directed by Khyentse Norbu (director of The Cup and Travellers & Magicians, which was shot in Sri Lanka. She received the Asian Award for best actress for her performance in this film.

Shahana also features in Madhur Bhandarkar's Heroine starring Kareena Kapoor, Arjun Rampal and Randeep Hooda.