She divorced him in the early '80s. At that time, it was apparent that her acting career was on a dead-end street and Marshall decided to try out directing. Beginning with television movies and series such as The Tracey Ullman Show, Marshall learned to direct. She made her feature film directorial debut with the Whoopi Goldberg vehicle Jumpin' Jack Flash (1986) which had originally been slated for director Howard Zieff.

Returning her brother's favors, she gave him a part in the film and also created a part for her daughter, Tracy Reiner (the offspring from Marshall's first marriage to Michael Henry). The film was a critical and box-office dud, but this did not deter Marshall from trying again. Her second attempt at directing, Big (1988), the story of a boy whose wish is granted and so finds himself stranded in a man's body, made actor Tom Hanks a movie star and established Marshall as a respectable big-league filmmaker. Still, she took two years to finish her next film, Awakenings (1990).

This was due in part to 20th Century Fox's reluctance to have the story filmed until Marshall had engaged her friends Robin Williams, in a rare subdued dramatic role, and Robert De Niro. A well-made and poignant drama, Awakenings received three Academy Award nominations, including one for Best Picture. For her next film, Marshall offered up a sentimental, funny, and ebullient look at the women who kept professional baseball alive when all the young men were off fighting during WWII in A League of Their Own (1992). It was a well-crafted effort that has grown in popularity on video and netted star Geena Davis a Golden Globe nomination. Since then, Marshall's directorial output yielded uneven results and her films, while still loaded with mainstream appeal, had yet to reach the degree of popularity of her earlier work. In addition to directing and producing, Marshall occasionally continued to work as an actress on television and in films. In the late '90s, she and her much-younger pal, comedian Rosie O'Donnell, became popular for a series of television commercials for K-Mart.