Lillie Knauls was born in Arkansas as one of seven children. She was thirteen when her father died; her family then moved across the country to Seattle, Washington, to live with her aunt. She started working for Pacific Telephone in 1956; she took a leave of absence to sing with the Edwin Hawkins Singers in 1970, singing on their radio hit "Oh Happy Day." The song crossed over onto the secular Billboard charts, the first Gospel song to do so; it would go on to sell over a million copies.
She released her first Gospel recording in 1975; later in the decade, after twenty-two years with Pacific Telephone, she left the company to sing full-time.
Her 2007 Vine/Crossroads release Past and Present won Knauls her first Dove Award, the 2008 Traditional Gospel Album of the Year trophy. She is also part of the Gospel Music Hall of Fame, as a member of the Edwin Hawkins Singers. At the induction ceremony, she accepted the award on behalf of the group.