Jutta Hipp was born on February 4, 1925, in Leipzig, the daughter of Karl Julius Hipp and Hulda Elisabeth Grassmann, in a middle-class Protestant family. She began classical piano lessons at nine and gave them up around 1939 after a strict teacher drained her enthusiasm, and she trained as a graphic artist at Leipzig's Academy of Graphic Arts. About 1940 an art-school friend, Ingfried Henze, took her to a meeting of the city's Hot Club, where banned jazz records and foreign radio broadcasts circulated even during air raids. She began collecting records and transcribing tunes off the radio, taking Teddy Wilson, Fats Waller, and Art Tatum as her models. In 1946, after she refused to design propaganda posters for the Soviet-run authorities, she and her family crossed into the American zone and settled in Munich. Her son Lionel was born in 1948, and she placed him in a children's home because she could not support him while playing American army clubs.

Music started as a living rather than a calling. She played officers' clubs at Tegernsee with the guitarist Thomas Buhé and her fiancé, the drummer Teddie Neubert, and then in Munich with Freddie Brocksieper, Charlie Tabor, and the tenor saxophonist Hans Koller. From 1951 she worked in Koller's group, moving with him to Frankfurt in 1952; its New Jazz Stars lineup included the trombonist Albert Mangelsdorff, the bassist Franz "Shorty" Roeder, and the drummers Rudi Sehring and Karl Sanner, and in March 1953 it opened for Dizzy Gillespie in Frankfurt. She was voted Germany's best pianist in jazz polls in 1952 and 1954, ahead of Paul Kuhn. In 1953 she formed her own quintet with the alto saxophonist Emil Mangelsdorff, the tenor saxophonist Joki Freund, the bassist Hans Kresse, and Sanner, adding Albert Mangelsdorff, the trumpeter Carlo Bohländer, or the guitarist Attila Zoller as guests. The group played the first German Jazz Festival in 1953 and took its cue from the cool jazz of Lennie Tristano, Lee Konitz, and Warne Marsh. Radio-archive recordings of her trio and quintet sets from 1952 to 1955 were issued decades later as The German Recordings 1952-1955.

In January 1954 the critic and producer Leonard Feather, in Germany with the Jazz Club USA tour that featured Billie Holiday and the clarinetist Buddy DeFranco, went to the Bohème club in Duisburg to hear the quintet he had first known from a tape. He arranged an April 1954 session in Frankfurt, and the music appeared in the United States on Blue Note's New Faces - New Sounds series as New Faces - New Sounds from Germany. In January 1955 she recorded in Sweden with the baritone saxophonist Lars Gullin for the Karusell label. After a final German concert in Hanover in October 1955, she emigrated to New York in November 1955 with Feather's help, billed in the American press as the First Lady of European Jazz. She became the first European jazz musician signed by Blue Note.

In March 1956 Feather placed her at the Hickory House on 52nd Street, where she stayed about six months, filling in for Marian McPartland, who was away on tour, with the bassist Peter Ind and the drummer Ed Thigpen. The set she recorded there live on April 5, 1956, was released by Blue Note that June as two volumes, At the Hickory House, produced by Alfred Lion. On July 28, 1956, at Rudy Van Gelder's studio in Hackensack, New Jersey, she led a quintet with the tenor saxophonist Zoot Sims, the trumpeter Jerry Lloyd, the bassist Ahmed Abdul-Malik, and Thigpen for Jutta Hipp with Zoot Sims, issued in February 1957. She also played the 1956 Newport Jazz Festival and worked in New York with the drummer Paul Motian, and her playing hardened under the influence of Horace Silver, a shift Feather disliked. Her relationship with Feather broke down by 1957 after she declined to record his compositions. Severe stage fright and heavy drinking were wearing on her, and in 1957 she toured the American South with the rhythm and blues saxophonist Jesse Powell, a trip she later called the most enjoyable of her career.

By 1958 she had stopped playing. She took work in a clothing factory, joined the Wallachs clothing company in 1960, and stayed 35 years, until it dissolved in 1995, while returning to the drawing, watercolor, and photography she had trained in; her caricatures of jazz musicians ran in the German magazine Jazz Podium in 1995. She became a United States citizen in 1999 and never went back to Germany. Blue Note had lost track of her and could not deliver her royalties until 2000, when the label found her through Lee Konitz and his wife Gundula, living in an apartment in Queens without a piano; in 2001 its representatives brought her a check for $40,000. She passed away on April 7, 2003, of pancreatic cancer, in her apartment in Sunnyside, Queens, and her ashes were scattered in Long Island Sound. A street in Leipzig, the Jutta-Hipp-Weg, was named for her in 2011, the Berlin Jazz Festival opened in 2012 with a tribute titled Remembering Jutta Hipp, and the six-CD set Hipp Is Cool: The Life and Art of Jutta Hipp appeared in 2015.

Hipp began as a pianist in the cool-jazz idiom of the Tristano school, steered there by Hans Koller, whose devotion to Lester Young also shaped her lines, and by her Frankfurt circle, though she later said she never especially favored the style. In New York she moved toward a percussive, swinging hard-bop touch in the manner of Horace Silver. Duke Ellington and Lennie Tristano both came to hear her at the Hickory House. AllMusic's reviewers describe the Hickory House sets as lightly swinging small-group jazz drawing on hard bop and soul-jazz, and call the album with Zoot Sims so well executed that her sudden departure from music is hard to explain. Her recording career in the United States lasted barely a year, and the three Blue Note albums remain her American legacy; the 1950s German recordings document the earlier phase, in which she led a quintet that introduced bebop and cool jazz to a country just out of the Nazi era.