Born in Maryville, Missouri, Caldwell grew up in Arkansas. She studied at the University of Arkansas, Hendrix College, the New England Conservatory of Music, and the Tanglewood Music Institute, focusing initially on the violin before switching to conducting.

In the 1950s, she taught at Tanglewood, the New England Conservatory, and Boston University. She launched the Opera Company of Boston, first called the Opera Group, in 1958, serving as conductor, director, and administrator.

Though small, lacking a permanent home, and chronically in debt, the company rapidly established a reputation for highly original stagings. It presented the American premieres of Schoenberg's Moses und Aron, Prokofiev's War and Peace, and Berlioz's Les Troyens, among other works, and presented such leading singers as Joan Sutherland, Beverly Sills, and Marilyn Horne.

In the 1970s, Caldwell conducted the New York Philharmonic and the Met, and was hailed in a Time cover story as "Music's Wonder Woman."

The OCB shut down in 1990, after debt forced Caldwell to sell the Boston Opera House, a converted movie theater and the company's last home base. Later, Caldwell served as principal guest conductor of Russia's Ural Philharmonic and taught at the University of Arkansas. She went on leave from the teaching position with health problems in 2001 and formally retired in 2004.