Caro was born in Wellington, New Zealand. She attended Kadimah College, Auckland, then Diocesan School for Girls, where she received an alumni award. Caro graduated with a BFA from the Elam School of Fine Arts at the University of Auckland in 1988 and received a Postgraduate Diploma in Film from the Swinburne University of Technology in Melbourne, Australia.
It was chosen for the New Zealand Prestigious Critics week in 1998. In 1999 the movie was voted best new film at the New Zealand Film Awards.
With the success of Whale Rider under her belt, Caro was chosen to direct her first Hollywood film, North Country (2005), starring Charlize Theron. It was later nominated for Best Actress for lead and supporting role at the Oscars, and also was nominated for a Golden Globe.
After doing North Country, Caro went back to New Zealand to write and direct the feature film The Vintner's Luck (2009) otherwise known as A Heavenly Vintage, which is about a peasant winemaker who sets out to make the perfect vintage wine. The film reunited her with her Whale Rider star Keisha Castle-Hughes.
In 2013 Caro announced plans to direct the film adaptation of The Zookeeper's Wife starring American Actress Jessica Chastain. The movie got released in 2017.
McFarland, USA starring Kevin Costner and directed by Caro was released in February 2015.
In February 2017, it was announced Caro will direct Disney's live action remake of Mulan. She will be the second woman at the studio to direct a movie budgeted at over $100 million, after Ava DuVernay.
