Roth was born in Boston, Massachusetts, the daughter of Katie (née Silverman) and Arthur Rutstein. Her family was Jewish. She was only 6 years old when her mother took her to Educational Pictures, where she became the company's trademark, symbolized by a living statue holding a lamp of knowledge. In her autobiography, she described being molested by the man who painted her as a statue.
The following year, she made her Broadway debut in The Inner Man. Her motion-picture debut came in 1918 in Pershing's Crusaders as an extra. Together with her sister Ann, she toured as "Lillian Roth and Co." At times, the two were billed as "The Roth Kids". One of the most exciting moments for her came when she met U.S. President Woodrow Wilson. According to her autobiography, the president took Lillian and her sister for a ride around the block in his chauffeur-driven car, after attending a performance of their vaudeville act.
Roth entered the Clark School of Concentration in the early 1920s. She appeared in Artists and Models in 1923 and went on to make Revels with Frank Fay. During production for the former show, she told management she was 19 years of age.
In 1927, when Roth was 17, she made the first of three Earl Carroll Vanities, which was soon followed by Midnight Frolics, a Florenz Ziegfeld production.
Soon the young actress signed a seven-year contract with Paramount Pictures. Among the films she made with Paramount were The Love Parade (1929) with Maurice Chevalier and Jeanette MacDonald, The Vagabond King (1930), Paramount on Parade (1930), Honey (1930; in which she introduced "Sing, You Sinners"), Cecil B. DeMille's Madam Satan (1930) with Reginald Denny and Kay Johnson, Sea Legs with Jack Oakie, and the Marx Brothers' second film, Animal Crackers (1930). She took over Ethel Merman's stage role in the film version of Take a Chance, singing "Eadie Was a Lady". After leaving Paramount, she had a supporting role in the women's prison film Ladies They Talk About (Warner Bros., 1933) with Barbara Stanwyck.
She headlined the Palace Theatre in New York City and performed in the Earl Carroll Vanities in 1928, 1931, and 1932. She continued to make strides as a singer in an era when so much was being set to music.
During this time, her personal life was increasingly overshadowed by her alcoholism. Although her parents were not stereotypical stage parents, as a response to their influence, Roth came to rely too much on other people. In her books and interviews, she said she was too trusting of husbands who made key decisions concerning her money and contracts.
Roth was out of the limelight from the late 1930s. Roth’s personal and spiritual feelings led her to convert to Catholicism in 1948. Friends accused her of forsaking Judaism; however, in her autobiography, I’ll Cry Tomorrow (1954), Roth observed that although her parents had believed in God, her sister and she had not been brought up religiously. Roth declared that she was so inherently Jewish that she could not really forget her heritage and thought that she was “the richer” because of it. In 1953, she appeared on a special episode of the TV series This Is Your Life with Ralph Edwards. In response to her honesty in relating her story of alcoholism, she received more than 40,000 letters. Her theme song, which she began singing as a child performer, was "When the Red, Red Robin (Comes Bob, Bob, Bobbin' Along)".
In 1962, she was featured as Elliott Gould's mother in the Broadway musical I Can Get It for You Wholesale, in which Barbra Streisand made her Broadway debut. Despite the acclaim for Streisand, producer David Merrick realized that Roth's name still sold tickets, and he elevated her to above-title star billing after the show's opening, with Gould, Streisand, and Sheree North listed below. Roth remained with the show for its full run of 301 performances and recorded the cast album for Columbia Records.
She was also featured as Mrs. Brice in the national touring company of Funny Girl in 1964, again getting top billing, though a feud with co-star Marilyn Michaels led to her being brought up on charges by Actors Equity. She was signed for a nonsinging role in Neil Simon's comedy The Prisoner of Second Avenue, but was replaced prior to the opening.
Roth was married at least five times, to aviator William C. Scott ("Willie Richards"), Judge Benjamin Shalleck, Eugene J. Weiner ("Mark Harris"), Edward Goldman ("Vic"), and Thomas Burt McGuire. Prior to her marriages, she was engaged to David Lyons, who died of tuberculosis. She divorced her first husband in 1932 after 13 months of marriage.
In 1955, she met her last husband, Thomas Burt McGuire, scion of Funk and Wagnalls Publishing Company at an Alcoholics Anonymous meeting (Roth joined Alcoholics Anonymous in 1946). The two wed and McGuire managed Roth until September 1963, when she received a note from him stating that their marriage was finished. According to Roth, he left her penniless after withdrawing all funds from their joint bank account.
In 1971, she returned to Broadway in the Kander and Ebb musical 70, Girls, 70, which despite its short run, was recorded by Columbia and has remained a popular cast album. She played a pathologist in the cult horror classic Alice, Sweet Alice (also known as Communion) in 1976. Her last film was Boardwalk, with Lee Strasberg, Ruth Gordon, and Janet Leigh (1979). A successful concert at Town Hall was released as an album by AEI Records after her death. One of her final appearances was in a well-reviewed club act at the legendary NYC nightclub, Reno Sweeney.
Roth's autobiography, I'll Cry Tomorrow, was written with author-collaborator Gerold Frank in 1954, and a toned-down version of it was made into a hit film the following year starring Susan Hayward, who was nominated for an Academy Award. The book became a bestseller worldwide and sold more than seven million copies in twenty languages, and the film renewed the public's interest in Roth. She recorded four songs for the Coral label (the first commercial recordings of her career), which were followed by an LP for Epic and another for Tops. She also headlined a vaudeville revival at the Palace on Broadway. A highlight of her act was an imitation of Susan Hayward imitating her (Roth) singing "Red, Red Robin".
In 1958, Roth published a second book, Beyond My Worth, which was not as successful as its predecessor, but told the compelling story of what it was like to be placed on a pedestal that she could not always live up to. Roth had managed to re-invent herself as a major concert and nightclub performer. She appeared at venues in Las Vegas and New York's Copacabana and was a popular attraction in Australia.
Roth died from a stroke in 1980, at the age of 69. The inscription on her marker in Mount Pleasant Cemetery in Westchester County, New York, reads: "As bad as it was it was good."