Born Moshe Stiller in Helsinki, Finland, he was the son of Russian-Polish Jewish parents. At age four, his mother committed suicide and he was raised by family friends. Drafted into the Russian army of Czar Nicholas II, rather than report for duty he fled the country and settled in Sweden.

By 1912 Stiller had become involved with Sweden's rapidly developing silent film industry. He began by writing scripts, plus acting and directing in short films but within a few years gave up on acting to devote his time to writing and directing. He was soon directing feature-length productions and his 1918 effort Thomas Graals bästa barn (Thomas Graal's First Child) with Victor Sjöström in the leading role, received much acclaim. By 1920, having directed more than thirty-five films, Stiller was a leading figure in Swedish filmmaking. At the Royal Dramatic Theatre in Stockholm he met a young actress named Greta Gustafsson whom he cast in an important but secondary role in his film, Gösta Berlings saga (The Atonement of Gosta Berling) giving her the stage name Greta Garbo. For Stiller, the screen presence of the eighteen-year-old actress led to him bringing her to the United States after he accepted an offer from studio boss Louis B. Mayer to direct for MGM.

In Hollywood, Mauritz Stiller was assigned to direct 1926's The Temptress but he could not deal with studio structure and after repeated arguments with MGM executives he was replaced on the film by Fred Niblo and his contract with the studio terminated. Stiller was immediately hired by Famous Players-Lasky Corporation where he made three successful films but was let go a second time while directing his fourth as a result of his continuing disagreements with studio bosses.

Mauritz Stiller returned to Sweden in 1927 and died the following year from pleurisy at the age of forty-five. He was interred in the Norra begravningsplatsen in Stockholm.

Stiller's contribution to the motion picture industry has since been recognized with a star on the Hollywood Walk of Fame at 1713 Vine Street. In Kristianstad, a monument was erected in his honor.