Livingstone was born Sadya Marks in Seattle, Washington, but raised in Vancouver, British Columbia. Her father, David Marks, was a Jewish prosperous scrap metal dealer from Romania. Her mother was Esther Wagner Marks. She first met her Future husband, Jack Benny, in Vancouver, British Columbia, Canada, at a Passover seder at her family home in 1922, when Benny played at the Orpheum Theatre. Benny was taken by his friend Zeppo (b. Herbert) Marx.

Jack Benny married Mary Livingstone 14 January 1927 at the Clayton Hotel in Waukegan, Illinois, one week after proposing.

Sadie took part in some of Jack's vaudeville performances but never thought of herself as a full-time performer, seeming glad to be done with it when he moved to radio in 1932. Then came the day he called her at home and asked her to come to the studio quickly. An Actress hired to play a part on the evening's show didn't show up and, instead of risking a hunt for a substitute, Benny thought his wife could handle the part: a character named Mary Livingstone scripted as Benny's biggest fan.

Never very comfortable as a performer despite her success, Livingstone's stage fright became so acute by the time the Benny show was moving toward television that she rarely appeared on the radio show in its final season, 1954–55. When she did appear, the Bennys' adopted daughter, Joan, occasionally acted as a stand-in for her mother, or Mary's lines were read in rehearsals by Jack's script secretary, Jeanette Eyman, while Livingstone's prerecorded lines were played during live broadcasts. Livingstone made few appearances on the television version—mostly in filmed episodes—and finally retired from show Business after her close friend Gracie Allen did so in 1958. Her final performance was as a mouse spoof of herself in The Mouse That Jack Built, a Merrie Melodies cartoon from 1959 lampooning the radio show.

After writing a biography of her husband, Mary Livingstone—whose surname is often misspelled without the 'e', as with her star on the Hollywood Walk of Fame for her contribution to radio—died from heart disease at her home in Holmby Hills on June 30, 1983, aged 78, hours after receiving a visit from then-First Lady Nancy Reagan. Her daughter Joan noted that the two women enjoyed a private manicure appointment. "The Doctor said it was a heart attack", Joan wrote, "but I have always felt she just gradually faded out of life."

Livingstone's relationship with their adopted daughter, Joan, was strained. In Sunday Nights at Seven (1990), her father's unfinished memoir that she completed with her own recollections, Joan Benny revealed she rarely felt close to her mother, and the two often argued:

Mary's trademark gag on the radio show, other than beleaguering Benny, was to read letters from her mother (who lived in Plainfield, New Jersey), usually beginning with "My darling daughter Mary...". The letters often included comical stories about Mary's (fictional) sister Babe — similar to Sadie's real sister Babe in name only — who was so masculine she played as a linebacker for the Green Bay Packers and worked in steel mills and coal mines, or their ne'er-do-well father, who always seemed to be a half-step ahead of the law. Mother Livingstone, naturally enough, detested Benny and was forever advising her daughter to quit his employ.