She was born in San Luis Potosí as María Guadalupe Vélez de Villalobos. She was lightly educated at a convent school in Texas before finding work as a sales assistant. She took dancing lessons and in 1924 made her performing debut at the Teatro Principal. She moved to California in 1924 and was first cast in movies by Hal Roach.
Her first feature-length film was Douglas Fairbanks' The Gaucho (1927), she did a further eighteen films before finding her niche in comedy with Hot Pepper (1933). She largely stuck to lighter roles from then, notably in the Mexcan Spitfire series of seven films (1939-1943). Vélez was one of few Hollywood actors to make a successful transition from silent film to 'talkies'.
Emotionally generous, she had a number of highly publicized affairs before marrying Johnny Weissmuller in 1933. The fraught marriage lasted five years, they repeatedly split and finally divorced in 1938. She went on to have another emotionally draining affair, this with Gary Cooper. In 1943 she returned to Mexico and starred in Nana (1944), well received she returned to Hollywood.
Lupe Vélez committed suicide with Seconal in Beverly Hills, California after the end of her relationship with Harold Raymond. Her suicide has gathered a cruel but grimly amusing story, made into a film by Andy Warhol in 1965 as Lupe.