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Hatfield was born in Wiscasset, Maine, the daughter of Philip M. Hatfield, a radiologist, and Julie Hatfield, a former Boston Globe features, society, travel writer, and fashion critic who currently works as a freelance travel writer. Hatfield grew up in the Boston suburb of Duxbury. Although well known for the early 1990s hit, "My Sister", Hatfield has two brothers, but no sisters. Hatfield's father claimed his family were descendants of the West Virginia Hatfields of the Hatfield-McCoy feud following the Civil War.

In 1995, following the success of Become What You Are she released her follow-up album, Only Everything, in which she "turned up the volume and the distortion and had a lot of fun". One reviewer describes it as "a fun, engaging pop album". The album spawned another alternative radio hit for Hatfield in "Universal Heartbeat". The video featured Hatfield as an overly demanding aerobics instructor. Prior to the tour for Only Everything, Hatfield released Phillips and brought on Jason Sutter (American Hi-Fi, Chris Cornell, Jack Drag), as well as Ed Slanker (Thudpucker, Tinsel) on 2nd guitar, and Lisa Mednick on keyboards. Two weeks into the tour, Hatfield canceled the tour, which her publicist explained as due to "nervous exhaustion," and took a month-long break.  In her memoir, Hatfield writes that in truth she was suffering from depression severe enough to the point of being suicidal. Hatfield disagreed with the decision not to be upfront about her depression. The drummer was, once again, replaced, this time by Phillips, and touring resumed with Jeff Buckley as the opening act.  In 1996, she traveled to Woodstock, New York where she recorded tracks for God's Foot, which was to be her fourth solo album (third if not counting Become What You Are, which was recorded with the Juliana Hatfield Three), intended for 1997 release. After three failed attempts to satisfy requests from Atlantic Records to come up with a "single" that the label could release, Juliana requested she be released from her contract. The label obliged, but kept the rights to the songs produced during these sessions (Atlantic had reportedly paid $180,000 to that point on the recordings). Two tracks - "Mountains of Love" and "Fade Away" - were eventually released on a greatest hits collection entitled Gold Stars, while still another, "Can't Kill Myself," was available for download from Hatfield's official website. The remaining tracks have surfaced only as substandard bootleg versions (which do not meet Hatfield's approval) and she has rarely featured them in her subsequent live performances.  In 1997 Hatfield toured with the first Lilith Fair, a prominent all-female rock festival founded by singer Sarah McLachlan.
Juliana Hatfield