Lazarus was the fourth of seven children of Moshe Lazarus and Esther Nathan, Portuguese Sephardic Jews whose families had been settled in New York since the colonial period. She was related through her mother to Benjamin N. Cardozo, Associate Justice of the US Supreme Court.

From an early age, she studied American and British literature, as well as several languages, including German, French, and Italian. Her writings attracted the attention of Ralph Waldo Emerson. He corresponded with her until his death.

Lazarus wrote her own poems and edited many adaptations of German poems, notably those of Johann Wolfgang von Goethe and Heinrich Heine. She also wrote a novel and two plays. Her most famous work is "The New Colossus", which is inscribed on the pedestal of the Statue of Liberty. Lazarus' close friend Rose Hawthorne Lathrop was inspired by "The New Colossus" to found the Dominican Sisters of Hawthorne.

Lazarus began to be more interested in her Jewish ancestry after reading the George Eliot novel, Daniel Deronda, and as she heard of the Russian pogroms in the early 1880s. This led Lazarus to write articles on the subject. She also began translating the works of Jewish poets into English. In the winter of 1882, multitudes of destitute Ashkenazi Jews emigrated from the Russian Pale of Settlement to New York; Lazarus taught technical education to help them become self-supporting.

She traveled twice to Europe, first in May 1885 after the death of her father in March and again in September 1887. She returned to New York City seriously ill after her second trip and died two months later on November 19, 1887, most likely from Hodgkin's lymphoma.

She is known as an important forerunner of the Zionist movement. She argued for the creation of a Jewish homeland thirteen years before Theodor Herzl began to use the term Zionism. Lazarus is buried in Beth-Olom Cemetery in Brooklyn.