Welch was born on October, 1967 in Manhattan, and was adopted on the day she was born. She moved to Los Angeles at the age of four. By the age of seven, she had learned to play the guitar. Studying at the University of California, Santa Cruz Welch discovered bluegrass through the "mountain soul" stylings of The Stanley Brothers. After a short stint in a local band, Welch moved to Boston and studied at the Berklee College of Music. In Boston, Welch met and began dating David Rawlings, who would become her longtime musical partner. In 1992, they moved to Nashville and began building a career. In Nashville, she met T-Bone Burnett, producer to such artists as Los Lobos, Sam Phillips, Counting Crows, and Elvis Costello. In 1996, Welch released her first album, Revival, which was nominated for a Grammy for Best Contemporary Folk Album in 1997. Since then, she has recorded other albums and contributed the song Didn't Leave Nobody But the Baby to the soundtrack album of the Coen Brothers hit O Brother, Where Art Thou?. Welch has also collaborated with good friend and singer/songwriter Ryan Adams on the albums Heartbreaker and Destroyer.
