Elisabeth Grünbaum, the youngest of eight children, came from a well-situated Jewish family and grew up in Praterstraße in Vienna’s 2nd district. Her father Bernhard Herzl was a goldsmith with a shop in central Vienna at Sterngasse 3/Rabengasse 2, in which her brother Maximilian Herzl (1878–1946), who was soon to settle in Antwerp, and her brother-in-law Sigmund Lukacs (1877–1971), husband of her sister Mathilde, were also involved. Another sister, Anna (1882–1948), was married to the retail jeweller Berthold Reis (1878–1953). In 1919, Elisabeth, called Lilly, married the actor and cabaret artist Fritz Grünbaum, eighteen years her senior. The couple lived from 1926 at Rechte Wienzeile 29/III/11. When Adolf Koppel (1865–1928), the husband of Lilly's sister Ida (1881–1935), died, Ida lived for some time with them. Fritz Grünbaum's urn from Dachau was to be buried some years later in the Koppels' grave.

When Fritz Grünbaum was arrested in May 1938 and interned at Dachau, his wife gave up the joint residence permit for Belgium that Max Herzl had organized for them. The modifications to the Vermögensanmeldung (declaration of assets) that Lilly had to fill out for her husband and herself reflect the rapid reduction in their assets over a short time. The transport costs she declared in June 1939 indicated that her husband's art collection, which had been stored hitherto with the transporter Spedition Schenker, had been liquidated there. It is still unclear what happened to the collection afterwards and how some of it survived until its sale by Lilly's sister Mathilde Lukacs after the war. Elisabeth Grünbaum attempted meanwhile to have her husband released from the concentration camp. She also gave up her quota number for emigration to the USA, because she did not want to leave without him. On 31 October 1938 she moved out of the apartment on the Rechte Wienzeile to her friend Elsa Klauber at Hofzeile 27 in the 19th district. After the death of Elsa's husband Paul Klauber, the two women moved on 15 April 1939 to an apartment at Kaasgrabengasse 15, also in the 19th district. Directly after Fritz Grünbaum's death at Dachau in 1941, Lilly Grünbaum and Elsa Klauber attempted one last time to escape, this time to Shanghai. But they were unsuccessful and on 26 November 1941 were forced to move into a "Sammelwohnung" (collective apartment) at Werdertorgasse 5/2/4a in the 1st district and then, on 8 August 1942, to Marc-Aurel-Straße 5/7. From there they were deported to Minsk on 5 October 1942 and probably murdered a few days later at Maly Trostinec. Shortly beforehand, Elsa Klauber had written a farewell letter to her daughter Annemarie, who had escaped to Britain on a Kindertransport, in which she mentioned that she was with Lilly. Margarethe Hassel, a friend of the two women, sent the letter after the war when she was sure that Elsa and Lilly would no longer return.

Although Mathilde Lukacs continued to search for her sister, she applied in June 1954 to have her declared dead in order, she claimed, to demonstrate her inheritance entitlement in the probate proceedings regarding Fritz Grünbaum. She withdrew the application shortly afterwards without explanation. Two years earlier she had contacted Galerie Kornfeld in Bern and sold some of her brother-in-law's art collection. Elisabeth Grünbaum was finally declared dead in 1962 on application of the art dealer Emil Rosner, who had also been persecuted by the Nazis. His claim to have been related to Fritz Grünbaum has not been confirmed.