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Lakshmi Rai was born in Bunt family in Bangalore on 5 May 1981 and was brought up at Belgaum. She initially worked as a model before entering the film industry. She appeared in several television ads such as Sylcon Footwears, Josco Jewellers and Emmanuel Silks.

Lakshmi Rai's first 2011 release was Christian Brothers opposite Mohanlal, which was a high commercial success. Her next two films were Tamil projects, the comedy horror Kanchana and the Venkat Prabhu-directed action thriller Mankatha, starring Ajith Kumar.