Lilyan Tashman's entertainment career began in vaudeville, and by 1914 she was an experienced performer, appearing in Song Revue in Milwaukee, Wisconsin, with rising stars Eddie Cantor and Al Lee. In 1916, she played Viola in a Shakespeare-inspired number for the Ziegfeld Follies and remained with the Follies for the 1917 and 1918 seasons. In 1919, Producer David Belasco gave her a supporting role in Avery Hopwood's comedy The Gold Diggers. The show ran two years with Tashman acting as an understudy, and occasionally filling in, for star Ina Claire.

In 1921, Tashman made her film debut playing Pleasure in an allegorical segment of Experience, and when The Gold Diggers closed she appeared in the plays The Garden of Weeds and Madame Pierre. In 1922, she had a small role in the Mabel Normand film Head Over Heels. Her personal and professional lives in 1922 were not entirely satisfactory (best friend Edmund Lowe moved to Hollywood, for Example, and she was fired from Madame Pierre) so she relocated to California and quickly found work in films. In 1924, she appeared in five films (including a cinematic adaptation of The Garden of Weeds) and received good reviews for Nellie, the Beautiful Cloak Model and Winner Take All. She freelanced, moving from studio to studio, but signed a long-term contract in 1931 with Paramount. She made nine films for the studio.

On September 21, 1925, Tashman married longtime friend Edmund Lowe, the well-known actor. The two became the darlings of Hollywood reporters and were touted in fan magazines as having "the ideal marriage". Tashman was described by reporter Gladys Hall as "the most gleaming, glittering, moderne, hard-surfaced, and distingué woman in all of Hollywood". The couple entertained lavishly at "Lilowe", their Beverly Hills home, and their weekly party invitations were highly sought after. Her wardrobe cost $1 million, and women around the world clamored for copies of her hats, gowns, and jewelry. Servants were ordered to serve her cats afternoon tea, and for Easter brunch she had her dining room painted dark blue to provide a contrast to her blonde hair. She once painted her Malibu home red and white, asked her guests to wear red and white, and even dyed the toilet paper red and white.

She easily managed the transition to sound films, making a total of 28, and appeared in some of the very first, including United Artists's Bulldog Drummond (1929), The Trial of Mary Dugan (1929), the now-lost color musical Gold Diggers of Broadway (1929), and New York Nights (1930) with Norma Talmadge. She starred as a murderess in the melodrama Murder by the Clock, as a self-sacrificing mother in The Road to Reno (1931), and as a chorus girl in Wine, Women and Song (1933). In 1932, her health began to fail but she appeared in The Wiser Sex, Those We Love, the film on the Russian Revolution, Scarlet Dawn, Mama Loves Papa with Charlie Ruggles (1933), and the musical Too Much Harmony (1933). In early 1934, she appeared in Riptide with Norma Shearer. Her last film, Frankie and Johnny, was released posthumously in 1936. Director George Cukor described Tashman as "a very diverting creature [...] outrageous and cheerful and goodhearted."

In 1932, Tashman entered the hospital in New York City for an appendectomy that is now considered a concealment for abdominal cancer. She left the hospital thin and weak. Although she made five films in her last years, performing with her usual artistry and professionalism, she weakened significantly in the months following her hospitalization and her role in Riptide was trimmed because of her ever-worsening health.

Tashman died of cancer at Doctor's Hospital in New York City on March 21, 1934 at the age of 37. Her funeral was held on March 22 in New York City synagogue Temple Emanu-El with Sophie Tucker, Mary Pickford, Fanny Brice, Cecil Beaton, Jack Benny, and other distinguished celebrities in attendance. Eddie Cantor delivered the eulogy. The burial in Brooklyn's Washington Cemetery attracted 10,000 fans, mourners, and curious onlookers; it became a near riot when people were injured and a gravestone was toppled. Tashman left no will, but the distribution of her $31,000 in cash and $121,000 in furs and jewels provoked contentious discussion among her husband and sisters, Hattie and Jennie. Her last film, Frankie and Johnny, was released posthumously in May 1936 with her role as Nellie Bly cut to a cameo.