Sonam was named by her parents (Mushir Khan - father and Talat Khan- Mother) as 'Bakhtavar'. 'Sonam' is her screen-name, which is reportedly coined by Yash Chopra to be more marketable in the Indian film industry.

She first entered into the Bollywood industry after being launched by Yash Chopra in the 1988 film Vijay. She was just 14 years of age at the time.She shot to fame with the 1989 film Tridev. She was known for the song Oye Oye...Tirchi Topi Wale in the film which was very popular at the time. In 'Aakhri Ghulam' with 'Mithun Chakraborty. She was also recognized for her performance in Mitti Aur Sona. Earlier, she was known as a sex symbol. She married Rajiv Rai when she was just eighteen years old and declared that she was quitting films. She appeared in over 30 films from 1988 through to 1994.

After marrying Rajiv Rai, who had directed her in Tridev and Vishwatma in 1992 she left the industry. Her son was born to her in May 1992 named Gaurav Rai. Her father-in-law was the successful film producer Gulshan Rai. She had to leave India with Rajiv Rai in 1997, after an attempt was made on his life by the Mumbai organized crime leader Abu Salem.

The couple settled in Los Angeles and then in Switzerland before shifting base to Mumbai again a few years ago. However, they have been living separately since 2001. Sonam and Rajiv divorced after 15 years of separation.