Although Hannigan had appeared in an industrial film for "Active Parenting" as a baby, as well as having starred in a commercial for the Duncan Hines cookie mix in 1978, it was not until 1985, when she moved to Los Angeles, California, that she formally began her acting career. Living with her mother and attending North Hollywood High School, she successfully auditioned for agents while visiting her father in Santa Barbara. After attending North Hollywood High School, she attended California State University, Northridge.
Hannigan's first major film role was in My Stepmother Is an Alien, a science fiction comedy released in 1988; one of her co-stars in the film was actor Seth Green, who would later join her in the regular cast of Buffy as her on-screen boyfriend. Then in 1989, her first regular role on a TV series came when she was cast in the short-lived ABC sitcom Free Spirit.