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Kim grew up in Pennsylvania and was the first child of parents who immigrated to the United States from Korea. She did well in science and math studies, and graduated from Dartmouth College in 1996 with a degree in Psychology. She considered becoming a doctor until deciding against it after a depressing month-long hospital stay due to an incident in which she broke her back while snow sledding on a golf course using a cafeteria tray.

She enrolled at the Parsons School of Design part-time, and worked at Allure Magazine, from which she was fired after a year. She gave herself a regrettable haircut and then shaved it off. In order to conceal her head, she wore a feathery hat of her own design which received compliments around town from several people, among them Parker Posey. The owner of New York City boutique Bond 07 asked to see more of her hats, and this led to a deal to sell them. After Barneys New York ordered her hats, she decided to start her own business.

Kim opened her first retail store in the East Village of downtown New York in 1997. She collaborated with photographer David LaChapelle early in her career. She comes from a family of doctors who expected her to become one as well, and "For the first six months, my parents absolutely didn't support me", she recalled in an interview in Marie Claire. Her hats can now be found in over 100 boutiques around the world, as well as department stores such as Bloomingdales, Saks Fifth Avenue, Nordstrom, and Neiman Marcus. Notable wearers of her hats include Tiffani-Amber Thiessen, Cameron Diaz, Madonna, Gwen Stefani, Gwyneth Paltrow, Lauryn Hill, Lindsay Lohan, Britney Spears, Kirsten Dunst, Paris Hilton and Christina Aguilera, although Kim says she rarely recognizes celebrities other than by name. One of Kim's biggest breaks was when Jennifer Lopez wore her now iconic "big white floppy hat" when she appeared onstage at the 2001 American Music Awards. Hip-hop musician Eve wears a Eugenia Kim hat on the cover of her album Scorpion.

She develops her design ideas using Microsoft Excel rather than by illustration on paper or by using graphics software, because she says she can't draw. She cites Elsa Schiaparelli as a role model.

She says she has OCD and ADD, but has "channeled" them in a way that has benefited her career.

She won the Perry Ellis Award for Accessories Design from the Council of Fashion Designers of America after launching a shoe line in 2004.

Her book, Saturday Night Hat: Quick, Easy Hatmaking for the Downtown Girl, was published in 2006.

In 2009, she did a line called Eek! for Urban Outfitters.

In 2010, she debuted her limited-edition "Eugenia Kim for Target" hat line, which she says was inspired by "Old Cuba". Kim is the first milliner to design a collection for Target.