Edith Flagg was born as Edith Feuerstein on November 1, 1919 in Vienna, Austria. She was raised in Galați, Romania, where her father worked as a photographer. She went to study fashion in Vienna at the age of fifteen. When Hitler annexed Austria in 1938, she fled to The Netherlands and later Poland, where she took the name of a dead woman to survive. She immigrated to a kibbutz in Israel at the end of the war, before moving to the United States.

She started her career in Los Angeles, California as a seamstress in 1948. Her clothing-line, “Edith Flagg, Inc.” (1956–2000), was a dress manufacturer in the United States from the 1950s through 2000. She became known for her use of polyester, after she found the new fabric by chance while she was on vacation in Switzerland in the 1960s. She signed an exclusive contract to import crimplene from England. She popularized its use in fashion clothing, which made her a multimillionaire. She retired from the fashion industry in 2000.  She was an active contributor to California Apparel News and Women’s Wear Daily.. They wrote a weekly column titled “By the Way”. In 1971, Edith and Eric Flagg were elected to the Advisory Board of Directors for Manufacturers Bank.  Later in life, she frequently appeared on the television show Million Dollar Listing to offer business advice to her grandson, Josh Flagg. When Josh was fourteen, he wrote a book about her: A Simple Girl: Stories My Grandmother Told Me. The book was published in 2009, prior to the show.

She was a donor to the United Jewish Welfare Fund, a Jewish non-profit organization, and the City of Hope, a private hospital in California.  Her first husband, Hans Stein, was caught by the Nazis and died at Auschwitz in 1944. Together with her second husband Eric Flagg (1916—1999), and their son Michael Hans Flagg (born 1943), she is a Holocaust survivor. Flagg and her husband were active members of the Dutch Resistance Forces that fought the Nazi regime and saved multiple Jewish and non-Jewish lives during the war. She also killed two Nazis.  She resided in a penthouse on the Avenue of the Stars in Century City, Los Angeles, which she purchased from Jack Benny in 1976.