Varney was born and raised in Tucson, Arizona. She graduated as salutatorian from Rincon High School in 1993 and is an alumna of San Francisco State University, where she majored in theater, graduating with a Bachelor of Arts in 1997. She later pursued a career in interior design before eventually finding her way back into acting. Varney was raised Mormon, but left the church at 17 and began to identify as an agnostic. Varney is of English and Scottish descent.

In 2005, Varney replaced Lisa Kushell as the host of the TBS cooking and entertainment show Dinner and a Movie. She appeared with Paul Gilmartin and Claud Mann in each episode, introducing films and injecting humor during the preparation of a creative dinner for some themes. The series was cancelled in 2011.

Varney was co-host of The Hollywood Show with Brian Unger, a recurring player on Norm Macdonald’s sketch show Back to Norm, and an ensemble player on Crossballs, all for Comedy Central. She also starred in the short-lived Fox comedy Happy Hour. In 2007, Varney appeared in the short films Random Acts of Kindness, Die Hardly Working, Eternal Waters, Worldly Possession, The Losers, Keep Off Grass, and Dress For Success which were made during the reality show On the Lot. She has appeared as recurring character Eve in the web series Back on Topps with Randy and Jason Sklar.

Starting in 2008, she began starring in the HBO television series Entourage, playing television producer Amy Miller who works alongside Eric and Charlie. Varney was also cast in a movie called Best Player, starring opposite Jerry Trainor and Jennette McCurdy. Varney played opposite John C. McGinley on IFC’s Stan Against Evil as Sheriff Evie Barret. The show was cancelled in 2019 after three seasons.

In 2012, she assisted Neil Patrick Harris and David Burtka in creating Neil’s Puppet Dreams.

Varney is the co-founder, creative director and producer of SF Sketchfest, the San Francisco Comedy Festival, and is also the co-founder of the San Francisco sketch group Totally False People. She is a core member of the Los Angeles based improv group Theme Park Improv. She performed with the Los Angeles and San Francisco-based group Sequel 4000. In March 2012, she launched a podcast entitled The JV Club, hosted on Nerdist.com from 2012 to 2018. In November 2018, it was announced that The JV Club would be moving to the Maximum Fun network.

In 2018 she also created, produced and starred in Fortune Rookie an 8 episode web series presented by IFC.