In 1997, Kajol starred in Gupt: The Hidden Truth. Co-starring actors Bobby Deol and Manisha Koirala, the film was one of the highest grossing films of that year. Apart from that, her performance was a significant development for female actors in Bollywood; she was the first female actor to win the Filmfare Best Villain Award. She next starred in Hamesha. Like Karan Arjun, the film dealt with the topic of reincarnation. However, unlike the latter, it was a box office failure. She next starred in her first Tamil film, Minsaara Kanavu. The film was a major critical success and Kajol won her first Best Actress award at the Filmfare Awards South ceremony. Her last release that year was the romantic-comedy Ishq, where she was paired with her then future husband, Ajay Devgan, which did well at the box office.

Kajol had further success in 1998, as she starred in three of the year's biggest hits. She first starred opposite Salman Khan in the comedy Pyaar Kiya To Darna Kya. The film was the fourth highest grossing film of the year. Her next release, Dushman alongside Sanjay Dutt, did moderately well at the box office. She had a double role in the film, and won her first Star Screen Award for Best Actress for her performance. She next starred opposite Ajay Devgan in the romance Pyaar To Hona Hi Tha, which was the second biggest hit of that year. However, her biggest success that year came with her last release, Karan Johar's directorial debut, Kuch Kuch Hota Hai, which went on to become the biggest hit of the year in both India and overseas.Additionally, Kajol Sex won her second Filmfare Best Actress Award for her performance.