Grace was born Margaret Grace Denig in Worthington, Ohio, the second of three children to parents Valinn and Rick Denig, who ran a family jewelry business.
Her family lived in a 200-year-old house, the first saltbox house in central Ohio.
After the filming of The Jane Austen Book Club was completed, Grace briefly returned to Hawaii to shoot a guest spot on the Lost season 3 episode "Exposé".
She played the lead in Simon Fellows' Malice in Wonderland, a modern adaptation of Lewis Carroll's Alice's Adventures in Wonderland.
She has begun production on Flying Lessons and appeared opposite Tom Cruise and Cameron Diaz in James Mangold's film Knight and Day.
Grace lived in Honolulu, Hawaii while working on Lost, saying "I love it here, but it's not a place you can really pursue acting." She claimed that, while living in Hawaii, her Lost co-stars would introduce her to men and that some "would probably have me with a different guy every night".
She said that her male co-stars were "mostly very protective" and "very opinionated" when deciding whether she should date certain men; actor Josh Holloway once offered to help her select dates from a portfolio of male models with whom he previously worked.
Variety reported in May 2005 that Grace was in negotiations to play X-Men character Kitty Pryde in the 2006 film X-Men: The Last Stand, but in July, auditions were reportedly being held for her replacement.