Otto was drawn to the film because she was "fascinated by the period and the people who came out of it". In 1993, Otto co-starred with Noah Taylor in the sexually provocative comedy film The Nostradamus Kid, which was based on the memories of author Bob Ellis during the 1960s. The film earned Otto her second Australian Film Institute nomination, this time for the best supporting actress award. Otto's next role was in the film The Last Days of Chez Nous, which portrayed the complex relationships between the members of an Australian family. Her appearance garnered Otto her first Australian Film Institute nomination for the best actress award the following year. In the film, directed by Kathy Mueller, she starred as a young woman who could communicate with horses. Otto's first post-graduation film role in 1991, as Nell Tiscowitz in The Girl Who Came Late, was her breakthrough role which brought her to the attention of the Australian film industry and the general public. Prior to graduation, she appeared in minor film roles including Initiation (1987) and The 13th Floor (1988). Otto graduated from the National Institute of Dramatic Art in Sydney in 1990. She had wanted to be a ballerina but was forced to abandon this goal due to moderate scoliosis.
Subsequently, Otto received a role in the 1986 World War II drama Emma's War. She appeared in several plays at the Nimrod Theatre, which attracted the attention of casting director Faith Martin. ĭuring her childhood, Otto and her friends wrote scripts and designed costumes and flyers in their spare time.
She spent weekends and holidays with her father in Sydney and developed an interest in acting through him. She briefly lived in Hong Kong following her parents' divorce at age six. Otto was born in Brisbane and was raised there and in Newcastle.