Rohatgi was born in Banjara Hills, Hyderabad, on November 9, 1980. She is the daughter of Veena Rohatgi and Shashank Rohatgi. She has a brother named Gaurav Rohatgi.
She was brought up in a middle class family and grew up in Ahmedabad in Gujarat. She completed her schooling from Udgam School and did her engineering from L.D. College of Engineering, Ahmedabad. She is a computer engineer by profession.
Payal started her career by modeling for popular brands like Amul, Nirma, and Nescafe. She gained attention after appearing in a television ad for Cadbury's Temptations Chocolates.
She appeared along with cricketer Virender Sehwag in an ad film for Dabur's Lal Dantmanjan. She was also seen in an ad film for Eveready battery in 2006 with Amitabh Bachchan.
Around this time she also appeared in music videos by rock band, Silk Route and Indipop artist, Kay Kay.
In 2002, she participated in the Femina Miss India contest. The same year, she won the Miss Tourism World in Medellin, South America. After starting her career in Bollywood, Rohatgi has cut back on the number of products she endorses.
Rohatgi made her Bollywood debut in 2002 with Harry Baweja's, Yeh Kya Ho Raha Hai?. She appeared in the films, Plan(2003), Police Force(2003) and Rakht(2004).
In 2006, she got her major breakthrough with the film, 36 China Town, also starring Shahid Kapoor, Kareena Kapoor, and Paresh Rawal. She played bit roles in Corporate, Dhol, Ugly Aur Pagli and Dil Kabaddi.
Also she has been doing theatre workshops with Quasar Thakur and has made debut on stage in Vandana Sajnani Khattar, english play Four Play on Oct 16th 2010 in Mumbai.
In August 2008, Rohatgi appeared in season 2 of the reality television show, Bigg Boss on Colors TV as a contestant. The same year, she was seen in the adventurous game show, Khatron Ke Khiladi. She appeared in the Ndtv Imagine show Raaz Pichle Janam Ka.
In 2008, during the second season of the show, Bigg Boss, Rohatgi was romantically linked with fellow inmate, Rahul Mahajan. The couple broke up later. Reports have also surfaced of her dating South African cricketer, Herschelle Gibbs in 2010.