Lauder was one of nine children born to a Hungarian Jewish Mother, and a Czechoslovak Jewish father. Her mother wanted to name her after a favourite aunt, Esty, however no one knew how to spell it, and it was considered "too unusual." Lauder's mother instead chose the name Esther to place on the birth certificate. Lauder's parents however continued to call her Esty, and with her father's accent, it sounded like he was saying Estée.
The Mentzers owned a hardware store, and Lauder started working there at an early age. Lauder's Uncle, Dr. John Schotz, a chemist, owned a company called New Way Laboratories, which created and sold various beauty products. Upon graduation from Newtown High School, she focused on her uncle's business, and rebranded one of his products "Super Rich All-Purpose Cream." She took to selling these products to her friends, and then to beauty shops, beach clubs, and resorts.
In January 15, 1930, she married Joseph Lauter (the spelling of the name was later changed to Lauder). They had a child, Leonard, in 1933, and another son, Ronald in 1944. In between the children, in 1939, Lauder and her husband separated, with Lauder moving to Florida. They remarried in 1942, and remained married until his death in 1982.
In 1935, the Estée Lauder company was founded with Leonard named Chief Executive. Lauder spent the rest of her life continuing to actively promote and sell her products.
On April 24, 2004, Lauder died of cardiopulmonary arrest in her Manhattan home. Lauder was 97.