Vidya was born in Palghat, Kerala, India. Her family consists of her dad, P.R. Balan, who is the Vice-President of ETC Channel; mom - a home-maker, and an elder sister, Priya, who is married to Kedar. She also has an aunt by the name of Raji Raju.
The Balan family re-located to live at Road No. 11, near Ambedkar Garden, Chembur, Bombay, when Vidya was
She appeared in three music videos for Pankaj Udhas, Euphoria, and Shubha Mudgal in supporting roles. She then also appeared in two TV serials Ekta Kapoor's 'Hum Paanch', and Ashok Pandit's 'Hanste Khelte'.
During 2003 she was signed-up to play a role in a Bengali movie 'Bhaalo Theko' opposite Joy Sengupta. This project was completed during the year 2006, and was a considerable hit.
Then during 2006 Vidya was approached by Vidhu Vinod Chopra during a pop-concert in Mumbai to play a lead role in 'Parineeta'. She then had to undergo 17 make-up shoots and 40 screen tests before being chosen for this role. All this hard work did result in success as 'Parineeta' was very well received so much so that the Tamil producer, who had previously rejected her, invited her to appear in a 'Dasavatharam' opposite Kamal Hassan
Apart from acting, Vidya occupies herself for supporting education for young Indians by promoting children's' books; is associated with Americans for Aids Research; with Hale House - that provides support and housing for children born with HIV and drug abuse; as well as hosting forums and attending events for Harvard Aids Institute.
Single, never involved in any relationship or scandal, she claims to get along well with both female and male friends.
An ardent devotee of Bhagwan Shri Sai Baba, she makes it a point to attend Mandirs every Thursday. She is proficient in Tamil, Malyalam, Hindi, English, Bengali, and can also read Urdu.