Obst is a graduate of Pomona College in Claremont, California and then studied Philosophy in the graduate program at Columbia University. Later she worked as an editor at The New York Times before moving to Los Angeles with her then-husband David Obst. Starting at The Geffen Film Company as a d-girl, her first major project was developing the scripts that would eventually become Flashdance.
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In 2009, Obst completed principal photography as producer on the Ricky Gervais–Matthew Robinson co-writing and directing debut, The Invention of Lying (originally titled "This Side of the Truth"), starring Ricky Gervais and Jennifer Garner. The film was released in October 2009. She was also the producer of Gurinder Chadha's Angus, Thongs and Perfect Snogging, released by Nickelodeon in 2008. In 2014, Obst collaborated with director Christopher Nolan to co-produce Interstellar, a science-fiction drama starring Matthew McConaughey and Anne Hathaway. This marked the first time her production company, Lynda Obst Productions, was credited for a production.
Obst is the author of the memoir Hello, He Lied (1996), which details her experiences in the modern studio system. She was one of the central figures in the battle over the Richard Preston article Crisis in the Hot Zone. Rick Rosen, one of the founders of the Endeavor talent agency, is Obst's younger brother.
She produced the movie Interstellar.