Caroline was the beautiful and innocent daughter of publishing magnate Bill Spencer, and was in love with Ridge Forrester. She was all set to marry Ridge when her father produced photographs of Ridge with his old girlfriend, Alex Simpson. Caroline was determined to go through with the wedding, but collapsed before she could say her vows. Caroline ended up in the hospital, where she was visited and befriended by Brooke Logan. After being released from the hospital, Caroline moved into her own apartment, but her life was forever changed after she allowed seemingly friendly Ron Deacon to walk her home one day and he forced his way into her apartment and raped her. Unable to return to her apartment, Caroline moved in with the Logans.

When Ron Deacon went to trial, his lawyer tried to tarnish Caroline's reputation by suggesting that it was a case of morning after jitters, but Ridge took the stand for Caroline, testifying that she was insistent on remaining a virgin until she was married. Ridge wrote Caroline a beautiful love letter, but Brooke, who was in love with Ridge, teamed up with Thorne, who was in love with Caroline, to keep the letter from her. When Thorne proposed, Caroline accepted believing there was no future for her and Ridge. Caroline eventually learned of the letter, but went through with her marriage to Thorne with Brooke as her maid of honor. Caroline later had second thoughts when she found out about Brooke's feelings for Ridge, but by then it was too late.

Caroline was furious with both Brooke and Thorne for manipulating her by hiding the letter. She told Brooke that their friendship was over. She agreed not to tell Ridge about the letter on the condition that Brooke would stay away from Ridge, which she agreed to do. Even though Brooke soon broke that promise, Caroline kept quiet.

After a drunken encounter with Ridge, Caroline and Thorne eventually broke up, and Ridge and Caroline wed. She was diagnosed with cancer not long after and she and Ridge had only a short period of time together before she died.

Caroline never met her twin sister Karen, who had been kidnapped as in infant and came to Los Angeles after Caroline's death.