Born into a family of actors, Terry began performing as a child, acting in Shakespeare plays in London, and toured throughout the British provinces in her teens. At 16, she married the 46-year-old artist George Frederic Watts, but they separated within a year. She soon returned to the stage but began a relationship with the architect Edward William Godwin and retired from the stage for six years. She resumed acting in 1874 and was immediately acclaimed for her portrayal of roles in Shakespeare and other classics.