Wood appeared in several made-for-television films from 1994 and onwards, also playing an occasional role in the television series American Gothic. In early 1997, Wood's parents separated and later divorced, and Wood moved with her mother to her mother's native Los Angeles, where Wood was cast in the supporting role of Jessie Sammler on the television show Once and Again. Wood's first major screen role was in the low-budget 1998 film, Digging to China, which also starred Kevin Bacon and Mary Stuart Masterson. Wood remembers the role as initially being "hard", but notes that it eventually led to her decision that acting is something she "might never want to stop doing".
Wood left regular school at the age of eleven, and was home schooled, because of bullying and difficulty with teachers, who Wood says treated her like she was "spoiled" because she was an actress. She later drew upon her experiences with bullying to portray a malicious high school student in Pretty Persuasion.
Wood subsequently appeared in a number of films catering to a teenage audience, including Little Secrets. She was set to have the leading role in the films Raise Your Voice and Mean Girls, but was unable to because of production scheduling changes. Wood's breakthrough movie role followed, with the controversial 2003 independent film Thirteen, for which she was nominated for a Golden Globe Award as Best Actress - Drama. During the time of Thirteen's release, Vanity Fair named Wood as one of the It Girls of Hollywood, and she appeared, along with the other actresses, on the magazine's July 2003 cover.
Her next two starring roles were in the dark independent films, Pretty Persuasion (2005), in which she played a villainous, sexually active high-schooler, and Down in the Valley (2006), in which her character engages in a sexual relationship with an older man posing as a cowboy. Wood has commented on her choice of sexually themed roles, saying that she is not aiming for the "shock factor" in her film choices, and adding that she hopes her roles "spread awareness" about the consequences of deviant behavior among teenagers, citing that she has known people who behave similarly to her film characters.
In 2005, Wood starred in the music videos for Bright Eyes' "At the Bottom of Everything" and Green Day's "Wake Me Up When September Ends". In September of 2006, she received Premiere magazine's "Spotlight Award for Emerging Talent".
Wood has roles in several as-yet unreleased films, including King of California, and Across the Universe, a musical directed by Julie Taymor and set in the United Kingdom, United States and Vietnam; she will perform musical numbers in the film. During August and September 2006, Wood filmed In Bloom, in which she plays a younger version of a character played by Uma Thurman. Wood is in negotiations to star in Bronte, a film about the Bronte Sisters.