THIS BIOGRAPHY CONTAINS EPISODE II SPOILERS
Shmi Skywalker, played by Pernilla August, was born and raised a human slave on Tatooine. She lived a normal lifestyle -- well, normal given the whole slavery on Tatooine thing -- until she became pregnant. This pregnancy was unusual in that Shmi was a virgin at the time.
Well, life went on. The baby was born a slave, and Shmi named him Anakin. Even as a young child, Anakin showed great skill in many areas, including inhuman reflexes and a knack for fixing things. Shmi and Anakin fell under the ownership of Gardulla the Hutt, who subsequently traded them to Watto the Toydarian, a mechanic and junk parts dealer in Mos Espa.
Enter The Phantom Menace
A political delegation from Naboo, headed for Coruscant and protected by Jedi, is sidetracked and forced to land near Mos Espa. Anakin, who is nine at the time, bumps into them and invites them to stay with himself and Shmi for the night.
Shmi takes this unforeseen opportunity, and pulls Qui-Gon Jinn, one of the Jedi, aside. She tells him that Anakin is a special child -- he has no father, seems to be able to tell the future, and wants above all else to be a Jedi. Qui-Gon secretly collects a sample of Anakin's blood, gets it analyzed, and discovers that Anakin has an unbelievably high amount of midichlorians in his bloodstream, indicating a close connection with the Force. It is indicated that the Force itself may have impregnated Shmi in order to create the Chosen One, who is supposed to bring balance to the Force.
Shmi begs Qui-Gon to take Anakin away from his life as a slave on Tatooine and raise him up to be a Jedi. Qui-Gon does his best: he makes a side bet with Watto on a podrace in which Anakin is racing, the bet being that Anakin will be freed if he wins. Qui-Gon attempts to add Shmi to the deal -- it is lightly implied that he has romantic feelings for her -- but Watto refuses. Anakin wins the race and is freed. He cries with his mother, promises to come back and free her, and leaves to become a Jedi.
Exit The Phantom Menace.
Shmi does not hear from her son for ten years. During this time, Watto descends into financial ruin -- perhaps because of the bets he made against Anakin in the podrace. He is forced to sell Shmi away (with C-3PO, a droid built by Anakin) to a moisture farmer named Cliegg Lars. Lars and Shmi fall in love and marry, and Shmi inherits Cliegg's son Owen as stepson.
Enter Attack of the Clones
About ten years after Anakin's podrace win, Shmi is captured and taken away by Tusken Raiders. Cliegg collects a search party of forty men to save her -- less than five return. While Cliegg is recovering from losing his right leg and planning another attempt at saving Shmi, Anakin returns.
In his ten years off Tatooine, Anakin has become a Jedi Padawan learner, and is nearly ready to become a full-fledged Knight. Since Shmi was captured (without his knowledge) he has had nightmares about her, and he finally decides to return to Tatooine with his love interest Padme Amidala. When he discovers what has happened to his mother, he flies off into the Tatooine wild alone to save and avenge her.
Anakin does find Shmi, tortured and bloody, held captive inside a Tusken encampment. She tells him that she loves him, and then she dies, causing Anakin great anguish -- if he had heeded his nightmares earlier, he would have been able to save her life. Filled with anger, suffering and hate, he massacres the encampment of Tuskens -- men, women, and children. He then returns Shmi's body to the Lars farm, where she is buried.