Lehmann was born in Perleberg. After studying in Berlin, she made her debut in Hamburg State Opera in 1909 as the Third Boy in Mozart's Die Zauberflöte. In 1914, she joined the Vienna State Opera, where she sang in the premieres of a number of Strauss's operas, Ariadne auf Naxos (1916), Die Frau ohne Schatten (1919), Intermezzo, (1924), and Arabella (1933) as well as Vienna premiers of several operas of Puccini. Lehmann made her debut in London in 1914, and from 1924 to 1935 she performed regularly at the Royal Opera House, Covent Garden.

She also appeared regularly at the Salzburg Festival (1926-1937), performing with Arturo Toscanini, among other conductors. She also gave recitals there accompanied by the conductor Bruno Walter.

In 1930, Lehmann made her US debut in Chicago as Sieglinde in Wagner's Die Walküre. Lehmann's other Wagnerian roles included Eva in Die Meistersinger and Elsa in Lohengrin, and she was also famous for her interpretation of Leonore in Beethoven's Fidelio. After Austria was annexed by Germany in 1938, Lehmann emigrated to the United States, where she sang at the Metropolitan Opera until 1945.

In addition to her operatic work, Lehmann was a renowned singer of lieder, giving frequent recitals up until her retirement. During her long career, Lehmann also made more than five hundred recordings.

After her retirement from the stage in 1951, Lehmann taught master classes at her home in Santa Barbara and in London. For her contribution to the recording industry, Lehmann has a star on the Hollywood Walk of Fame at 1735 Hollywood Blvd. However, her first name was misspelled as "Lottie."

She was a prolific writer, publishing a novel, Orplid, mein Land (1937); two books of memoirs, Anfang und Aufstieg (1937), My Many Lives (1948); and a book on the interpretation of song, More Than Singing (1945).