At age 15, Hagerty was signed as a model by Eileen Ford and began spending summers working in New York City Two years later, she left Cincinnati and moved to NYC, where she continued to model while working with her brother, Michael Hagerty, as his theater, The Production Company, and studying with William Hickey. In 1979, Hagerty finally made her Off- Broadway debut in a production of "Mutual Benefit Life" at her brother's theatre, then played Corinna, a deaf, slightly daffy actress, in The Production Company's version of John Guare's "The House of Blue Leaves" that same year. In 1986, she again played Corinna, this time in the Broadway revival which she recreated for the 1987 PBS television version. In 1994, Hagerty returned to NYC in the cast of A.R. Gurney's "A Cheever Evening", where she and the cast of six played over 50 characters spanning 30 years.
Soon after appearing on stage, Hagerty was discovered for the movies. While she had been cast in a small role in "All That Jazz" (1979), directed by her then-beau Bob Fosse, Hagerty's performance ended up on the proverbial cutting room floor. In 1980, she was the leading lady of the zany "Airplane!" and her film career was launched. She also appeared in the subsequent "Airplane II: The Sequel" and in Woody Allen's "A Midsummer Night's Sex Comedy" (both 1982). Hagerty was a hippie-turned-fashion designer in "Rude Awakening" (1989), Richard Dreyfuss' wife also put upon by Bill Murray in "What About Bob?" (1991) and was featured in the ensemble of "Noises Off" (1992). She made a cameo appearance as Alexandra Isles, the soap opera actress romantically involved with Claus von Bulow (Jeremy Irons) in Barbet Schroeder's "Reversal of Fortune" (1990).
Hagerty's TV work has been sporadic, and much of it on PBS. She made her debut in the NBC TV-movie, "The Day the Women Got Even" (1980), but is better remembered for playing the wife uncomfortable when her husband's ex-girlfriend arrives in "The Visit" (PBS, 1987) and as the mother sued by her children in order to keep her from divorcing their father in "Necessary Parties," (PBS, 1988). In 1991, she was a regular on the CBS sitcom "Princesses," but bowed out after only a few episodes had been produced. Hagerty continued to be a familiar presence in film and on television throughout the 1990s, appearing in films such as "The Story of Us" as Bruce Willis' ex and in guest shots on hit series such as "ER" (NBC, 1994- ) "King of the Hill" (Fox, 1997- ) and "Everybody Loves Raymond" (CBS, 1996-2005). In 2001, she appeared in director Tod Solandz's artsy if troubling "Storytelling" as well as in Tom Green's less-than-artsy but even more troubling "Freddy Got Fingered," and she had a small but eye-catching role in "A Guy Thing" (2003), a romantic comedy about a soon-to-be married man (Jason Lee) whose last night as a single man finds him in trouble and possibly in love with another woman (Julia Stiles).
Hagerty had a supporting role in another mainstream comedy, "Just Friends" (2005), starring Ryan Reynolds as a suave music executive (Ryan Reynolds) whose former life as a shy and overweight high school senior is resurrected when he runs into the best friend (Amy Smart) he had a crush on. During the summer of 2005, she filmed "She's the Man," a contemporary take on William Shakespeare's "Twelfth Night" that explores the comic and romantic complications that ensue when a teenage girl (Amanda Bynes) poses as her missing twin brother for two weeks. The romantic comedy was set to release in March 2006.