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Lee starred opposite Anthony Michael Hall as the sweet but vengeful housewife Eve Robbins in the 2001 USA Cable movie Hitched. When the series was picked up Lee was also given the part of Laura's cousin Maddy Ferguson later in the series (a role which was reportedly written because Lynch impressed with her abilities wanted to give her a fuller role on the show). It would have been the second time Sheryl Lee would have played a dead character on a series; however the producers ultimately chose to replace her with Brenda Strong.
She is also known for portraying photographer Astrid Kirchherr in Backbeat (1994) and for her roles in Vampires (1998) and Winter's Bone (2010) as well as for her television series roles in LA Doctors Kingpin One Tree Hill and Dirty Sexy Money. She came to international attention for her performances as Laura Palmer and Maddy Ferguson on the 1990 cult TV series Twin Peaks and in the 1992 film Twin Peaks: Fire Walk with Me.