Sheela made her debut in Paasom opposite MGR. Her first film in Malayalam was Bhagyajathakom, with Sathyan. The next two decades saw her essay roles in more than 410 films in films such as Chemmeen, Kallichellama, and Vazhve Mayom. She has won many awards such as Kerala State Film Awards, the Lux award and the Filmfare Lifetime Achievement award.
Her name, along with Prem Nazir's name figures in the Guinness Book of World Records, for acting together consecutively in 107 films. In the 70s and 80s, Sheela's tried her hand at directing as well. She directed two films, Yakshaganom and Shikarangal. She wrote the story, script, and screenplay for Shikharangal, which was also remade in Tamil. Besides films, she has directed a telefilm Ninaivukale neengividu in which Jayabharathi acted. She acted as Akhilandeswary in the 2005 blockbuster Chandramukhi. She has also authored a book, titled Kuilinte Koodu.
Sheela returned to acting, playing the main role in Sathyan Anthikkad's Manassinakkare. The film was a huge hit, and her performance was critically acclaimed. Sheela bagged the Kerala State Film Award for best supporting actress in the film Akale.