She was born in Houston, Texas to Gerald Edward Fadal (of Syrian and Lebanese descent) and Patricia Dianne Abbott (who had French, English, and American Indian (Cherokee) descent); she was raised in Waco, Texas. In high school, Elizabeth was very much interested in tennis and at one point even considered a professional tennis career. She worked as a model before she began a career in film. In August 1999, she appeared nude in Playboy magazine. In 2003, she was featured in Maxim magazine.

Elizabeth was in a relationship with Joseph D. Reitman for ten years, including three years of marriage. The couple separated in March 2005, and Elizabeth filed for divorce in late June 2005.

After her husband helped play a practical joke on Elizabeth for Ashton Kutcher's MTV television series Punk'd, a year before their divorce, which involved leading Elizabeth to think that she was caught on a sex tape, some people have speculated that this was the cause of their breakup. She now stars in the UPN series Cuts alongside singer/actor and another punk'd victim Marques Houston.

Elizabeth participated in the 2005 World Series of Poker main event. She also won a special tournament celebrating the opening of a new poker room at Caesars Palace in January 2006, beating out 83 celebrities and poker professionals to win $55,000.

Animal Avengers, a non-profit animal rescue organization founded by Elizabeth, is dedicated to rescuing and finding a home for homeless pets, reducing pet overpopulation, promoting responsible pet guardianship and preventing animal cruelty. Among the many fund raising events, Team Bodog raised over $50,000 for Animal Avengers in a celebrity poker night on October 8, 2005. The event was hosted by noted tournament director Matt Savage. Over the past year Shannon Elizabeth has participated in numerous other Bodog-sponsored charity events as well.