David Irving sued her and her publisher, Penguin Books, for libel in an English court, after she characterized some of his writings and public statements as Holocaust denial in her book Denying the Holocaust.Lipstadt's legal defence team was led by Anthony Julius of Mishcon de Reya while Penguin's was led by Kevin Bays and Mark Bateman of Davenport Lyons. Both defendants instructed Richard Rampton QC while Penguin also instructed Heather Rogers as junior counsel. The expert witness for the defence was Cambridge historian Richard J. Evans, assisted by Christopher Browning, Robert Jan van Pelt and Peter Longerich.

Although English libel law puts the burden of proof on the defendant rather than the plaintiff, Lipstadt and Penguin won the case using the justification defence, viz. by demonstrating in court that Lipstadt's accusations against Irving were substantially true and therefore not libelous. The case was argued as a bench trial before Mister Justice Gray, who produced a written judgment 334 pages long detailing Irving's systematic distortion of the historical record of World War II. The Times (April 14, 2000, p. 23) said of Lipstadt's victory, "History has had its day in court and scored a crushing victory."

Despite her acrimonious history with Holocaust denier David Irving (and in keeping with herself being sued by him for her writing), she has stated that she is personally opposed to the Austrian court's decision in 2005 to sentence Irving to three years in prison for his speech (Holocaust denial is punishable in Austria by a maximum 20-year sentence). "I am uncomfortable with imprisoning people for speech. Let him go and let him fade from everyone's radar screens."

In February 2007, Lipstadt used the neologism "soft-core denial" at the Zionist Federation's annual fundraising dinner in London. Referring to groups such as the Muslim Council of Britain, reportedly she stated: "When groups of people refuse to commemorate Holocaust Memorial Day unless equal time is given to anti-Muslim prejudice, this is soft-core denial." According to Paul, "She received huge applause when she asked how former US President Jimmy Carter could omit the years 1939-1947 from a chronology in his book"; referring to his recently-published and controversial book Palestine Peace Not Apartheid, she said: "When a former president of the United States writes a book on the Israeli-Palestinian crisis and writes a chronology at the beginning of the book in order to help them understand the emergence of the situation and in that chronology lists nothing of importance between 1939 and 1947, that is soft-core denial."

Along the same lines, Lipstadt has criticized the German philosopher and historian Ernst Nolte for engaging in what she calls "soft-core denial" of the Holocaust, and has argued that Nolte practises an even more dangerous form of negationism than the Holocaust-deniers. Speaking of Nolte in a 2003 interview, Lipstadt stated:

"Historians such as the German Ernst Nolte are, in some ways, even more dangerous than the deniers. Nolte is an anti-Semite of the first order, who attempts to rehabilitate Hitler by saying that he was no worse than Stalin; but he is careful not to deny the Holocaust. Holocaust-deniers make Nolte's life more comfortable. They have, with their radical argumentation, pulled the center a little more to their side. Consequently, a less radical extremist, such as Nolte, finds himself closer to the middle ground, which makes him more dangerous".

In 2009, she strongly criticized the lifting of the excommunications on the bishops of the Society of Saint Pius X, especially that of Richard Williamson, saying that the Vatican "has made itself look like it is living in the darkest of ages."