Irene Handl was born in Maida Vale, London, the daughter of an Austrian banker father, Frederick, and German mother, Maria Schiepp. She took to acting at the relatively advanced age of 36, and studied at the acting school run by the sister of Dame Sybil Thorndike. She made her London stage debut in February 1937 and appeared in over a hundred British films in supporting roles, mostly comedy character parts such as slightly eccentric mothers, grannies, landladies and servants. Among many stage appearances, she played Lady Bracknell in The Importance of Being Earnest in 1975, directed by Jonathan Miller.

On television, she appeared as a guest in a number of comedy series, notably as a regular in the 1958 series Educating Archie and as Cockney widow Ada Cresswell in For the Love of Ada, which would later be adapted for the cinema. She would also appear in Maggie and Her (1978) opposite Julia McKenzie. In the early 1980s, she played Gran in the ITV children's comedy show Metal Mickey. She appeared in a rare aristocratic role as the Duchess of Sheffield in Mapp and Lucia and as another aristocratic character in Eric Sykes' 1982 television film It's Your Move where her chauffeur was played by Brian Murphy. She also appeared as Madame de Bonneuil in the BBC's film of Hotel du Lac in 1986.

In addition to her acting career, she wrote two novels: The Sioux (1965), described by Margaret Drabble as "Strange and unforgettable...Highly original and oddly haunting" and The Gold Tip Pfitzer (1966).

Handl died at her flat in Kensington, London on 29 November 1987, from metastasised breast cancer; the death was registered by her agent, Glanville Evans. She was unmarried.