Carstensen, the daughter of a physician, was born and raised in the north-German city of Kiel. Upon graduation from the local high school in 1958, she studied acting at the Hochschule für Musik und Theater Hamburg. This education led to her first stage appearances in Kleve, Heilbronn, Münster and Braunschweig. In 1965 Margit Carstensen received a four-year engagement with the Deutsches Schauspielhaus (German Playhouse) in Hamburg. There she played leading roles in plays by John Osborne and the classical Spanish playwright Lope de Vega.

In 1969 she gained a local profile for her work in the Theater am Goetheplatz in Bremen, where she first met director Rainer Werner Fassbinder. She then worked under his direction in a comedy by the 18th-century Venetian Carlo Goldoni The Coffee Shop (which was recorded for television in 1970), bringing her national attention in West Germany. She subsequently played the role of serial murderess Geesche Gottfried in the premiere of Fassbinder’s own play Bremen Freedom (also televised, in 1972), and then in the title role of his Henrik Ibsen adaptation Nora Helmer (televised in 1974) derived from A Doll’s House.

Margit Carstensen has received many awards in her career. Among these are the 1973 German Film Awards (Gold), for her acting in The Bitter Tears of Petra von Kant, and the 2002 Bavarian Film Award, for her acting in Scherbentanz. In 1972 she was chosen by the German Film Critics Guild as Best Actress of the Year.

From 1973 to 1976 Carstensen held a steady acting engagement in Darmstadt, and the next year worked once again in Hamburg. In 1977 she moved to what was then West Berlin where she performed on the highly regarded Staatliche Schauspielbühnen. In 1982 she moved to Stuttgart in order to work with director Hansgünther Heyme, where she appeared in a series of plays directed by him. Over the years she also performed in many smaller roles on the most important of the German-language stages, for example making several appearances in the Munich Kammerspiele.

By the late 1980s she had developed ongoing working relationships with the German directors Werner Schroeter, Christoph Schlingensief and Leander Haußmann. In 1995 she followed Haußmann to Bochum, in order to work with him there. For the 2003-04 season, Carstensen appeared in the Vienna Burgtheater, in the premiere of Elfriede Jelinek’s play Bambiland under the direction of Schlingensief.

In 2008 she appeared in the Schauspielhaus Bochum (Playhouse Bochum), in Shakespeare’s As You Like It.