She is a recipient of several awards, including a National Film Award, two Filmfare Awards and a Filmfare OTT Award. In 2023, she was awarded the Padma Shri, the fourth highest Indian civilian honour.

In the 2000s, Tandon ventured into arthouse cinema with roles in the 2001 films Daman and Aks, both of which garnered her critical acclaim, winning the National Film Award for Best Actress for the former and a Filmfare Special Performance Award for the latter. Post her marriage with film distributor Anil Thadani, Tandon took a break from films. She intermittently appeared on television with shows like the Sahara One drama Sahib Biwi Gulam (2004), the dance reality show Chak De Bachche (2008) and talk shows Isi Ka Naam Zindagi (2012) and Simply Baatien With Raveena (2014). After several years of hiatus, Tandon starred in the thriller Maatr (2017) and received praise for her leading role in the Netflix crime thriller series Aranyak (2021), winning a Filmfare OTT Award for Best Actress.[3] Tandon had a supporting role in her highest-grossing release, K.G.F: Chapter 2 (2022).