Peggy Lee was born Norma Deloris Egstrom on May 26, 1920, in Jamestown, North Dakota, the seventh of eight children of Marvin Egstrom, a railroad station agent, and Selma Egstrom, who died when her daughter was four. The family followed the Midland Continental line through several small towns, and she graduated from high school in Wimbledon, North Dakota, in 1937. She sang with a local college dance band led by Lyle "Doc" Haines, made her radio debut on KOVC in Valley City in 1936, and in October 1937 was auditioned and renamed Peggy Lee by Ken Kennedy of Fargo's WDAY. She left for Hollywood in March 1938, returned home after a collapse from overwork, then spent 1939 singing at the Powers Hotel in Fargo and touring with the Sev Olson and Will Osborne orchestras. Back in California in 1940, a job at the Doll House in Palm Springs taught her the approach that became her trademark: unable to outsing a noisy room, she sang more quietly until the room came to her. That hushed delivery got her booked into the Buttery Room of Chicago's Ambassador West hotel, where bandleader Benny Goodman, shopping for a replacement for Helen Forrest, heard her.

Lee joined the Benny Goodman Orchestra in the summer of 1941 and stayed about two years. Her first record with the band was "Elmer's Tune," and after a four-song session on November 13, 1941, "Somebody Else Is Taking My Place" gave her a top-ten hit in 1942. On July 27, 1942, in New York, she recorded "Why Don't You Do Right?," a reworking of a blues first cut by the Harlem Hamfats in 1936 and popularized by Lil Green in 1941; it sold more than a million copies, appeared on the flip side of "Six Flats Unfurnished" on Columbia, and made her famous, with film appearances alongside Goodman in Stage Door Canteen and The Powers Girl (both 1943). In March 1943 she married the band's guitarist, Dave Barbour, and left Goodman. Her official biography records that she won the 1946 best female vocalist polls of both Metronome and Down Beat.

From 1944 Lee recorded for Capitol, where she and Barbour wrote many of her hits, among them "I Don't Know Enough About You," "It's a Good Day," and "Mañana (Is Soon Enough for Me)," which held the top spot for nine weeks in 1948. Her first album, Rendezvous with Peggy Lee, came out on Capitol in March 1948, the same year she began co-hosting NBC's Chesterfield Supper Club with Perry Como and Jo Stafford. As a lyricist she also wrote "What More Can a Woman Do?," recorded by Sarah Vaughan with Dizzy Gillespie and Charlie Parker. She and Barbour divorced in 1951.

Moving to Decca in 1952, Lee had a No. 3 pop hit with "Lover" and worked with Gordon Jenkins and Bing Crosby, then recorded the album that jazz listeners return to most. Over sessions on April 30, May 1, and May 4, 1953, at Decca's New York studio, she cut the songs of Black Coffee with a small group built around trumpeter Pete Candoli and pianist Jimmy Rowles, with bassist Max Wayne and drummer Ed Shaughnessy; Decca issued it as a ten-inch LP in 1953 and as an expanded twelve-inch LP in 1956 after she cut four more songs in Hollywood. She also turned to film. Playing an alcoholic singer in Jack Webb's Pete Kelly's Blues (1955) earned her an Academy Award nomination for best supporting actress, the companion album with Ella Fitzgerald reached No. 7 on the pop chart, and the same year she co-wrote the songs for Disney's Lady and the Tramp with Sonny Burke and voiced four of its characters.

Returning to Capitol in 1957, she made the records that define her peak. The Man I Love paired Nelson Riddle's arrangements with Frank Sinatra on the podium. In May 1958 she recorded her own arrangement of "Fever" with Jack Marshall, a spare setting of bass, finger-snaps, and a barely-there drum kit played by Shelly Manne, which became her only top-ten hit on the Hot 100 and drew three nominations at the first Grammy Awards. Things Are Swingin' (1958), Beauty and the Beat! (1959, with the George Shearing quintet), Blues Cross Country (1962, mostly arranged by Quincy Jones), and Mink Jazz (1963, with arrangements by Benny Carter and Max Bennett) are the core of her jazz-leaning Capitol work. In 1969 "Is That All There Is?," written and produced by Jerry Leiber and Mike Stoller with an orchestral setting by Randy Newman, won her a Grammy and reached No. 11 on the Hot 100. In 1971 she sang the Lord's Prayer at the funeral of Louis Armstrong.

Her later years were quieter on the charts but busy elsewhere. Paul McCartney produced the title track of Let's Love (Atlantic, 1974), she wrote "The Nickel Ride" with Dave Grusin for the 1974 film, and after suing Disney in 1988 over video-cassette royalties on Lady and the Tramp she was awarded more than $3 million in 1991, a judgment upheld on appeal in 1992. She returned to straight jazz with Miss Peggy Lee Sings the Blues (1988, her first album in nine years, with pianist Mike Renzi and drummer Grady Tate), recorded a set of rare Harold Arlen songs later released as Love Held Lightly (1993), and made her last studio album, Moments Like This (Chesky, 1993). She kept performing into the 1990s, sometimes from a wheelchair. Peggy Lee passed away on January 21, 2002, aged 81, of complications from diabetes and a heart attack. Her honors include a Hollywood Walk of Fame star (1960), induction into the Big Band Jazz Hall of Fame (1992), a Grammy Lifetime Achievement Award (1995), and the Songwriters Hall of Fame (1999). A 2003 tribute concert at Carnegie Hall, with Marian McPartland among the performers, was broadcast on NPR's JazzSet.

Lee built her style on understatement. By her own account she learned in Palm Springs to sing under the noise rather than over it, and the result was a sultry, slightly behind-the-beat delivery in which a single held note or a clipped syllable does the work another singer would do with volume. Her best-known arrangement trick, the finger-snap-and-bass skeleton of "Fever," reduced a rhythm-and-blues song to almost nothing, and critic Will Friedwald counted Black Coffee among his desert-island records. William Ruhlmann heard in her restrained 1957 recordings with Riddle and Sinatra something close to Billie Holiday. Joni Mitchell called Black Coffee one of her favorites and opened her 2000 album Both Sides Now with "You're My Thrill" from it, and later singers from Diana Krall to k.d. lang and Elvis Costello have cited her. Her catalog divides between jazz-oriented albums (the Goodman sides, Black Coffee, Beauty and the Beat!, Blues Cross Country, Mink Jazz, the late blues and Arlen sets) and mainstream pop, country-tinged novelties, film work, and Broadway material; Wikipedia's opening sentence calls her a jazz and popular music singer, and it files her under jazz singers, big band singers, and traditional pop. She also wrote more than 270 songs, many of which have become standards.