Hildegard Knef was born in Ulm. Her parents were Hans Theodor and Friede Augustine Knef. Her father, a decorated First World War veteran, died of syphilis when she was only six months old, and her mother moved to Berlin and worked in a factory. Knef began studying acting at age 14 in 1940. She left school at 15 to become an apprentice Animator with Universum Film AG. After she had a successful screen test, she went to the State Film School at Babelsberg, Berlin, where she studied acting, ballet, and elocution. Joseph Goebbels, who was Hitler's propaganda minister, wrote to her and asked to meet her, but Knef's friends wanted her to stay away from him.

Her two best known film roles were "Susanne Wallner" in Wolfgang Staudte's film Die Mörder sind unter uns (The Murderers Are Among Us), produced in 1946 by the East German state film company, and the first film released after the Second World War in East Germany; and "Marina" in Die Sünderin (The Sinner), in which she performed a brief nude scene, the first in German film history, which caused a scandal in 1950. The film was also criticised by the Catholic Church, which protested against the nude scene. Knef stated that she didn't understand the tumult that the film was creating. She wrote that it was totally absurd that people reacted in that manner and made a scandal because of her nudity as Germany was a country that had created Auschwitz and had caused so much horror. She also wrote, "I had the scandal, the producers got the money."

She performed in many films. In 1948, she received the best-actress award from the Locarno Film Festival because of her role in the film Film Without a Title. Her successful singing career started in the 1960s once her film career was not going very well. She wrote some songs by herself. She performed in television shows such as in episodes of Scarecrow and Mrs. King and in a 2000 documentary in which she was playing by herself Marlene Dietrich: Her Own Song.

Her reputation in the U.S. was hurt because of her nude scenes in the German film Die Sünderin (1950) and because at the age of 19 she fell in love with a Nazi.

David O. Selznick invited her to Hollywood, but she refused to agree to the conditions of the contract which reportedly included changing her name to Gilda Christian and pretending to be Austrian rather than German. Knef was cast as Hilde in the Hollywood film Decision Before Dawn (1951) directed by Anatole Litvak. She co-starred with Richard Basehart and Oskar Werner in a story about the last days of the German war.

Years later, Knef's first husband, an American named Kurt Hirsch, encouraged her to try again for success in the U.S. She changed her name from Knef to Neff. But she was only offered a supporting role in the Hemingway adaptation of The Snows of Kilimanjaro (1952). Knef became a leading lady in films of Germany, France and Britain.

Finally, in 1955, Knef was offered an important role in America in the musical Silk Stockings by Cole Porter, which was based on the film Ninotchka (1939) which starred Greta Garbo in the title role. Knef had acted in at least 30 films in the United States and Europe, but her triumph was in New York when she performed the role of Ninotchka, an unemotional Soviet commissar. The New York Times' drama critic, Brooks Atkinson described her rendition as an immensely skillful performance."

In the 1960s, Knef took a break from acting and started writing song lyrics. Then she started a successful concert and recording career. She began her singing career in the United States on Broadway. She began her new career in 1963 as a singer and surprised her audiences with the deep, smoky quality of her voice and the many lyrics, which she wrote herself. Fans around the world rallied in her support as she defeated cancer several times. She returned to Berlin after the reunification. In her peak, entertainment columnist called her the ""willowy blonde" who had "dusty voice" and "generous mouth". In the 1960s and 1970s, she enjoyed considerable success as a singer of German chansons, which she often co-wrote. The song she is mostly remembered for is "Für mich soll's rote Rosen regnen" ("Red roses are to rain for me"). She is also known for her version of the song "Ich hab noch einen Koffer in Berlin" ("I still have a suitcase in Berlin") and "Mackie Messer" ("Mack the knife"). She sold more than three million records in total.

She was married three times and divorced twice. Her first marriage was in 1947 to Kurt Hirsch. He was a U.S. information officer. They got divorced in 1952. The second time she married the actor and record Producer David Anthony Palastanga, on 30 June 1962. Knef had a daughter with him. They named her Christina Antonia. She attended public schools in Germany. When Knef was 47, she wrote a letter for her 5-year-old daughter. She wrote what she had learned; of beauty; of her grandfather’s legacy about anti-human beings, of unconditional love and truth. She also wrote that the only mission of humans in this world was to serve in one form or other because she had noticed that those who didn’t serve ended up as slaves. When she died, she was still married to her third husband, Paul von Schell.

She published several books. Her autobiography Der geschenkte Gaul: Bericht aus einem Leben (The Gift Horse: Report on a Life, 1970) was a candid recount of her life in Germany during and after the Second World War, and reportedly became the best-selling German book in the post-war years. Her second book Das Urteil (The Verdict, 1975) was a moderate success, and dealt with her struggle with breast cancer. Knef not only achieved international best-seller status, her books were also widely praised by critics because her autobiographies were "better-than-the-average celebrity's". Arthur Cooper of Newsweek claimed that the way in which Knef accounted in The Gift Horse: Report on a Life her childhood and difficult life being an Actress and singer while living in Hitler's Berlin and after the war in Europe and America, was "a bitterly honest book and a very good one". The book is not considered a book of "Hollywood-Broadway gossip. The book doesn't try to persuade the public depicting a made up celebrity's adventures. It seems a book that tells the real life of Knef. It refers to her struggles as a German woman who grew up in Berlin under the Nazis. The Gift Horse: Report on a Life was translated to English by Knef's second husband David Anthony Palastanga. In The Verdict which was also translated by Palastanga, Knef looked at her life in another perspective because she knew that she had cancer. Rachel MacKenzie wrote that Knef had her 56th operation, a mastectomy, in Salzburg on 10 August 1973. MacKenzie stated that from that cancer surgery, life had to be thought of in terms of pre-verdict and post-verdict. The book is divided in these two sections but they are not chronologically ordered because Knef wrote the two sections in a way that the reader is moved forward and backward in time and space. The Verdict describes in great detail the hospital scenes as well as the doctors and Nurses in New York, Los Angeles, Zürich and Hamburg where she was hospitalised.

She appeared in the 1975 screen adaptation of the Hans Fallada novel, Every Man Dies Alone directed by Alfred Vohrer, released in English as Everyone Dies Alone in 1976, and for which she won an award for best Actress at the International Film Festival in Karlovy Vary, then Czechoslovakia.