Li was born Qian Zhenzhen in Beijing; 1915. Her father; Qian Zhuangfei; was an important figure among the early heroes of the Communist Party. In 1927 she moved to Shanghai; where her father encouraged her to join the China National Song & Dance Troupe; later renamed Bright Moon Song and Dance Troupe. Li Jinhui; later known as the Father of Chinese popular music; was the conductor of the troupe and adopted her as his god-daughter; and she adopted his surname.

The troupe were very popular in 1920s Shanghai. Li Lili; Wang Renmei; Xue Lingxian and Hu Jia were known as the Four Divas. The troupe joined the Lianhua Film Company in 1931; and disbanded the troupe the next year. Li became an actress; and starred in Sun Yu's 1932 Loving Blood of the Volcano. Set in the South Seas with plenty of dancing; this allowed Li to play to her strengths. She and Wang Renmei then acted together in Poetry Written on the Banana Leaf.

After war with Japan broke out in 1937; she joined the China Film Studio in Chongqing. There she met and married Luo Jingyu; a section head; who became head of the studio. In 1939 she filmed Cai Chusheng's Orphan Island Paradise in Hong Kong; it was another hit. Back in Chongqing; she starred in another hit film Storm on the Border; for which she was highly praised.

Li travelled to the United States in 1946; studying acting at Catholic University in Washington; language and singing in New York; and make-up at the University of California. She also observed filmmaking at Hollywood. She returned to China; and to acting at the Beijing Film Studio. In 1955; she studied at Beijing Film Academy; and later taught in the acting department. Her son; Luo Dan; married the daughter of Marshal Ye Jianying; Ye became China's head of state in the late 1970s.

During the Cultural Revolution; Li and her husband were denounced and tortured on the orders of Mao's wife Jiang Qing. Li had acted with her; and outshone her; in films such as Blood on Wolf Mountain. Li later told her family that she refused to denounce anyone. Luo; however; was killed.

In 1991; she was given the 'Special Honour Award' by the Chinese Academy of Motion Picture Arts. By the end of her life; Li Lili was the last living Chinese movie star from the silent era. She died of a heart attack in Xuanwu Hospital; Beijing on August 7; 2005; aged 90.