Lakshmi was born to veteran Telugu film maker Yaragudipati Varada Rao of Nellore, Andhra Pradesh, whose films dealt with important social issues. Her mother Kumari Rukhmini was a Tamil actress, whose mother Nungambakkam Janaki was also an actress. She made her acting debut in Sri Valli, a Tamil film released in 1961, when she was nine. Lakshmi rose to fame from her First Malayalam movieChattakari in 1974. This movie has the distinction of being the first Malayalam film to run continuously for 40 weeks in a Bangalore theatre. It was remade in Hindi and Telugu. After the success of her debut Malayalam film Chattakari, she starred in many other films in Malayalam. Ananth Nag and Lakshmi are considered one of the all-time greatest pairs in South Indian cinema. They acted together in more than 25 films. After her success in Julie, however, she didn't star in many Hindi films and instead concentrated on doing more South Indian films. When her career as a leading lady ended in the 1980s, she started playing supporting roles as a mother and later as grandmother. She has performed in more than 400 films and has also been involved in politics. She also directed a Kannada film Makkala Sainya. Her first marriage was to Bhaskar in 1969, a Malayali, who worked with an insurance company and the couple have a daughter, Aishwarya. Later she married Mohan Sharma in 1975 which also ended up in divorce in 1980. She and actor-director K.S. Sivachandran fell in love and got married in 1989. Lakshmi adopted a baby girl in 2000 and named Samyuktha.