A successful Liberal Party politician, Caplan was born in Toronto, one of two daughters (the other is Carol Lou Hershorn Spiegel, b. 1946) of Samuel S. Hershorn, a manufacturer (b. Toronto, 1914), and Thelma (Goodman) Hershorn (b. Toronto, 1920), whose families had come to Canada from Russian Poland. Following study at Centennial Community College in Toronto, Caplan worked in real estate, heading Elinor Caplan and Associates from 1973 to 1978. During those years, she took her first steps into politics as president of a neighborhood tenants association.
In 1978, she began to climb the ladder of professional politics as an alderman in the city of North York, which was later merged into the city of Toronto. As a member of council, Caplan occupied the post of city comptroller. In 1985 she left municipal politics and entered provincial politics as a member of the provincial parliament (MPP) for a Toronto riding. During the twelve years she sat as an MPP, Caplan served as a member of the Policy and Priorities Board, as minister of Government Services (1985–1987) and Health (1987–1990) and as chair of the Cabinet Committee on Social Policy. Following the defeat of the Liberal government in 1990, she acted as chief opposition whip until 1997.
In the latter year Caplan was elected to the federal parliament from a suburban Toronto riding with a large Jewish population. In Ottawa, she became parliamentary secretary to the minister of Health (1998–1999), minister of Citizenship and Immigration (1999–2002) and then minister of National Revenue (2002–2003). She is the first Jewish woman to have served as a cabinet minister at both the provincial and federal levels.
As minister of Citizenship and Immigration, Caplan came under fire from Jewish groups for several of her decisions, most notably one regarding Magen David Adom, the Israeli equivalent of the Red Cross. Her recommendation was to strip the group of its status in Canada as a charity, donations to which are tax deductible. The reason was that the organization used its ambulances and medical equipment beyond the 1967 borders of Israel. The decision was later reversed.
On other occasions Caplan was praised by Jewish groups, especially for urging that Nazi war criminals in Canada be prosecuted (a step that the German Canadian Congress deplored). She has spoken out in favor of the Israeli-Arab peace process and against American pressure on Israel. After a cabinet shuffle in 2002 she was shifted to the Department of National Revenue, a ministry which deals with less contentious issues and where her ethnic background was of no relevance. She was not a candidate in the 2004 elections.
Caplan is a life member of Canadian Hadassah-WIZO and served a term as president of its Gilo Chapter. In 1999 she was named Woman of the Year by Canadian Yad Vashem. Since 1963 she has been married to Mayer Wilfred Caplan (b. Toronto, 1935), a businessman. They have four children: David (b. 1964), Mark (b. 1966), Zane (b. 1968) and Meredith (b. 1972). David has followed his mother's footsteps into politics. After some years as a school trustee and vice-chair of the Toronto Board of Education, he was elected as a Liberal MPP in his mother’s former riding.