Stanley was born as Maude Elsie Aileen Muggeridge in Chicago, Illinois. In her childhood, with the urging of her widowed mother, she and her older brother Stanley sang and danced in vaudeville as Stanley and Aileen. After her brother left the act she started performing solo, forming her stage name by reversing the name of the old family billing.
Stanley performed on vaudeville and in cabarets. In 1920 she made a hit in New York City in the review show "Silks And Satins". She made the first of her numerous recordings the same year. Throughout the 1920s she would record prolifically. The majority of her records were for the Victor Talking Machine Company, but she also recorded with other record labels with recording studios in the New York City area, including Edison, Pathe, Okeh, Brunswick, Vocalion, Gennett and others. Many of her records sold well at the time.
Stanley even recorded for Black Swan Records, a label supposedly devoted only to African-American artists, under the pseudonym "Mamie Jones". Her handling of blues material was similar to that of some of the "colored" northern vaudeville singers of the time.
Her stage apperances billed her as "The Phonograph Girl" and "The Girl With The Personality".
In the late 1920s Victor Records produced a popular series of records pairing Stanley with singer Billy Murray.
Stanley was said to have invested heavily in the stock market, and was one of the many who lost most of their money in the Market Crash of 1929.
About 1931 she moved to London, where she made more records for HMV from 1934 through 1937.
In her later years she worked as a singing teacher and vocal coach.
Aileen Stanley died in Los Angeles, California.