Born in Munich, Germany, Müller entered films in the late 1920s in Berlin and quickly became popular. A blue-eyed blonde, she was considered to be one of the great beauties of her day and along with Marlene Dietrich was seen to embody fashionable Berlin society.

She starred in more than 20 German films, including Viktor und Viktoria (1933), one of her biggest successes, which was remade decades later as Victor/Victoria with Julie Andrews.

With the rise of the Nazi Party, Müller came to be regarded as an ideal Aryan woman and particularly in light of Dietrich's move to Hollywood, was courted and promoted as Germany's leading film actress. A meeting with Adolf Hitler in the mid 1930s resulted in Müller being offered parts in films that promoted Nazi ideals.

When she died suddenly, the German press stated the cause as epilepsy, however in later years it was discovered she had died as a result of a fall from her hotel window. Officially described as a suicide, it was theorised that she took her own life when her relationship with Nazi leaders deteriorated after she showed unwillingness to appear in propaganda films. She was also known to have been pressured to end a relationship with her Jewish lover, but had refused. Near the end of her life she became addicted to morphine. Witnesses also recalled seeing several Gestapo officers entering her building shortly before she died. It has been asserted she was either murdered by Gestapo officers who threw her from a window, or that she panicked when she saw them arrive and jumped. The true circumstances surrounding her death remain unclear.