Billie Holiday was born Eleanora Fagan (some sources spell the first name Eleonora) on April 7, 1915, in Philadelphia, the daughter of two teenagers, Sarah "Sadie" Fagan and Clarence Halliday, a banjo player and guitarist who left the family soon after her birth and later played in Fletcher Henderson's band. Her paternity and some early details are disputed: a copy of a birth certificate held in the Baltimore archives names a man called Frank DeViese as her father, which many historians treat as a clerical anomaly, and her 1956 autobiography is inconsistent about her childhood. She grew up in Baltimore in the care of relatives, was brought before a juvenile court at nine and sent to a Catholic reform school, and left school at eleven. By early 1929 she had joined her mother in Harlem, and she later named the records of Louis Armstrong and of Bessie Smith as the first music that mattered to her, singling out "West End Blues."

She began singing in Harlem nightclubs as a young teenager, taking her stage name from the film actress Billie Dove and from her father, whose surname she first spelled Halliday. In late 1932 she replaced Monette Moore at Covan's, a club on West 132nd Street, and the producer John Hammond heard her there in early 1933. He arranged her first recording session, on November 27, 1933, with Benny Goodman's orchestra, and "Riffin' the Scotch" became her first hit. In 1935 Hammond signed her to Brunswick to record current pop songs in a small-group swing style with the pianist Teddy Wilson, starting with "What a Little Moonlight Can Do" and "Miss Brown to You." The studio bands drew on top swing-era soloists, among them the tenor saxophonists Lester Young, who had boarded at her mother's house in 1934 and gave her the nickname "Lady Day" (she called him "Prez"), and Ben Webster. From July 1936 she also released records under her own name on Vocalion, and Wilson accompanied her more than anyone else; they made 95 recordings together. In late 1937 she spent a few months as the vocalist with Count Basie's orchestra, choosing her own songs and shaping the arrangements, but she was gone by February 1938 for reasons that sources report differently, among them temperament and a dispute over pay and conditions. A month later she joined Artie Shaw's band, one of the first Black women to work full time with a white orchestra and the first Black female singer to tour the segregated South in that role. Her one studio side with Shaw was "Any Old Time" (1938), and she left in November 1938 after the Lincoln Hotel in New York insisted that she use the service elevator.

In 1939 Holiday brought a new song to Café Society, the integrated Greenwich Village nightclub: "Strange Fruit," a protest against lynching that the Bronx schoolteacher Abel Meeropol had published as a poem and set to music himself. She closed her sets with it under a single spotlight, with service in the room stopped. Columbia declined to record it, then released her from her contract for one session so that she could cut it for Milt Gabler's Commodore label on April 20, 1939, backed with her own blues "Fine and Mellow." It became the biggest seller of her career, reaching roughly a million copies, and the recording was later chosen for the Library of Congress's National Recording Registry and the Grammy Hall of Fame. "God Bless the Child," which she wrote with Arthur Herzog Jr. and recorded on May 9, 1941, also sold more than a million copies and ranked third on Billboard's 1941 year-end list.

Gabler moved to Decca and signed her there on August 7, 1944. Her first Decca record, "Lover Man," made with strings on October 4, 1944, reached number 5 on the R&B chart, and "Don't Explain," which she wrote herself, followed. In 1946 she filmed New Orleans, co-starring with Armstrong and Woody Herman, though much of her footage was cut. Heroin addiction led to her arrest for narcotics possession in her New York apartment on May 16, 1947. She pleaded guilty, served her sentence at the Alderson Federal Prison Camp in West Virginia, and was released early on March 16, 1948; the conviction cost her New York cabaret card, which barred her from clubs that sold alcohol. Eleven days after her release she played a sold-out Carnegie Hall concert, with 2,700 tickets sold in advance, a record for the hall at the time. She was arrested again in San Francisco on January 22, 1949.

From 1952 she recorded for Norman Granz's Clef label and its successor Verve, mostly in small groups. Oscar Peterson and Ray Brown joined her on the first sessions in 1952 and a 1954 date; in Los Angeles in August 1955 she recorded Music for Torching and Velvet Mood with trumpeter Harry "Sweets" Edison, altoist Benny Carter, and pianist Jimmy Rowles; and in January 1957 she made three Verve albums with Edison, Rowles, guitarist Barney Kessel, and Webster. In January 1954 she made her first European tour, part of a Leonard Feather "Jazz Club USA" package that played Sweden, Germany, the Netherlands, France, and Switzerland. Her autobiography Lady Sings the Blues, ghostwritten by William Dufty, appeared in 1956, and on November 10 she gave two Carnegie Hall concerts to mark it. From April 1957 Mal Waldron was her regular accompanist; he was at the piano when she sang at the Newport Jazz Festival in July 1957 and on the CBS broadcast The Sound of Jazz on December 8, 1957, where she sang "Fine and Mellow" in a reunion with Young. Her last two albums used orchestral settings by Ray Ellis: Lady in Satin for Columbia (February 1958), and a final MGM session in March 1959, with a rhythm section that included pianist Hank Jones, bassist Milt Hinton, and drummer Osie Johnson, released after her death as Last Recording.

Young died on March 15, 1959. Holiday, by then diagnosed with cirrhosis, was taken to Metropolitan Hospital in New York on May 31, and federal narcotics agents placed her under arrest in her hospital room. She received last rites on July 15 and passed away on July 17, 1959, at age 44, of pulmonary edema and heart failure brought on by cirrhosis. Her funeral was held on July 21 at the Church of St. Paul the Apostle in Manhattan, and she is buried at Saint Raymond's Cemetery in the Bronx. DownBeat elected her to its Hall of Fame in 1961, and Columbia soon reissued nearly a hundred of her early records. She later received four posthumous Grammy Awards for Best Historical Album and, in 2000, was inducted into the Rock and Roll Hall of Fame as an early influence.

Holiday had almost no formal musical training and built her art on her ear. She said she wanted her voice to behave like an instrument, named Armstrong and Bessie Smith among her influences, and from her first sessions reshaped melodies and stretched or compressed phrases against the beat; John Hammond called her the first girl singer he had heard who sang like an improvising jazz genius, and Young remarked that on their old records the two of them sounded like one mind. Her small-group Brunswick and Vocalion sides of the 1930s are often heard as band records with a vocal line rather than singer-and-accompaniment dates, since the soloists answered her phrases and took choruses of their own. From "Strange Fruit" onward she also helped make protest and personal testimony part of a mainstream repertoire. By the late 1950s years of illness had given her voice a thinner, raspier texture and cost it much of its upper range, which divided critics on Lady in Satin, though her rhythmic phrasing remained unmistakable. Frank Sinatra told Ebony in 1958 that she was the greatest single musical influence on him, and singers from Ella Fitzgerald to Anita O'Day and Peggy Lee found models in her Brunswick and Vocalion records. The historian Loren Schoenberg has called her the definitive jazz singer, the Rock and Roll Hall of Fame says she changed jazz forever, and Rolling Stone placed her fourth in its 2023 ranking of the 200 greatest singers.