She then led the IMF's tentatively successful efforts to halt the implosion of the eurozone and -- not coincidentally -- helped the Fund get past the embarrassing sex scandal left by her predecessor Dominique Strauss-Kahn.
But one key act when she was French finance minister in 2007-2008 -- not preventing a huge state payout to controversial tycoon Bernard Tapie -- threatens to mar that record and possibly cut short her career on the global stage.
A French court was to determine Thursday whether Lagarde should be charged over the Tapie case for complicity in fraud and misappropriation of public funds.
A steady career climb to the top of global finance has long made the deep-tanned, silver-haired Lagarde a French standout.
Now 57, she was born in Paris to academic parents and brought up in the port city of Le Havre.
As a teenager she was a synchronized swimming champion and learned to speak nearly flawless English.
After earning a law degree, she skipped a French establishment career and instead joined the Paris office of prestigious US legal consulting giant Baker & McKenzie.
Over 18 years she pushed her way up to become chairwoman of the company's global executive committee in 1999, a first for the firm, and then of its global strategy committee in 2004.
She then embraced politics, in June 2005 joining the government of president Jacques Chirac as trade minister.
Two years later Chirac's successor Nicolas Sarkozy named her agriculture minister, and shortly after switched her to the finance portfolio.
Though no economist, she proved deft at dealing with the erupting financial crisis that would threaten eurozone unity.
In 2011, with France in charge of the G20 group of the world's largest economies, she became the pointwoman on efforts to combat the effects of the crisis and reform the global financial system.
That record underpinned her being chosen ahead of strong emerging economy rivals to be IMF managing director after Strauss-Kahn was forced to resign in May 2011.
At the IMF, she played a crucial role in renegotiating the second Greek bailout and worked hard to contain the fallout from rescues in Portugal, Ireland, and Cyprus.
Both a tough negotiator and a determined consensus-builder, she didn't hesitate to cross swords with the very officials she was working closely with in her previous job, even criticizing her successor as finance minister, Pierre Moscovici, of being asleep during one Cyprus crisis meeting.
"There are many instances of Ms. Lagarde's courageous truth-telling," said economist Desmond Lachman, a former IMF official.
At the same time, she has skillfully managed the shifting currents of power in the Fund, where emerging giants like China are challenging the Europe-US-dominated status quo.
She has also fashioned herself as an icon to talented women fighting male dominance in large organizations like the IMF.
At the same time, the divorced mother of two sons, now in a relationship with her seldom-seen former schoolmate, Marseille businessman Xavier Giocanti, keeps her feelings and personal life hidden beneath a hard shell.
Though a smooth talker, she at times has drawn accusations of aloofness. While a minister, she told French complaining about high fuel prices to ride their bicycles.
The vegetarian still pushes herself hard in the pool, damaging her knee in workouts last year.
"I think in a previous life I must have been a dolphin," she told The Wall Street Journal.