The daughter of a cavalry captain, she was raised by a grandmother in Paris, where she studied various forms of art with an emphasis on music and the opera. In 1905 she married engineer-novelist Marie-Louis Albert-Dulac and under his influence veered toward journalism. As one of the leading radical feminists of her day, she was editor of La Française, the organ of the French suffragette movement. She also doubled as theater and cinema critic of the publication and became increasingly enamored with film as an art form. In 1915 she formed, with her husband, a small production company, Delia Film, and began directing highly inventive, small-budget pictures. Chronologically, she was the second woman director in French films, after Alice Guy, a contemporary of Méliès.

With La Fête Espagnole (1919) and her masterpiece, La Souriante Madame Beudet (1923), Dulac emerged as a leading figure in the impressionist movement in French films.

In the late 20s, she was an important part of the "second avant-garde" of the French cinema with the surrealistic The Seashell and the Clergyman / La Coquille et le Clergyman (1927) and a number of other experimental films. In these as well as in her theoretical writing, her goal was "pure" cinema, free from any influence from literature, the stage, or even the other visual arts. She talked of "musically constructed" films, or "films made according to the rules of visual music."

Dulac was also instrumental in the development of cinema clubs throughout France in the mid-20s. Sound put an end to her experimentations and her career as a director. From 1930 until her death she was in charge of newsreel production at Pathé, then at Gaumont.