Magdalena Schneider was born in Augsburg, Bavaria, the daughter of an installer. She attended a Catholic girls' school and a commercial college, thereafter she worked as a stenographer in a grain store. At the same time, Schneider studied singing at the Leopold Mozart Conservatory in Augsburg and ballet at the municipal theater. She made her stage debut at the Staatstheater am Gärtnerplatz in Munich. Schneider drew the attention of the Austrian Director Ernst Marischka who called her to the Theater an der Wien in Vienna, and in 1930 gave Schneider her first film role.
While filming in 1933, Schneider met her Future husband, the Austrian actor Wolf Albach-Retty. The couple married in 1937 and had two children: Rose Marie Magdalena, called Romy, and Wolf-Dieter, later a surgeon, born in 1941. During World War II, Schneider lived in the Bavarian Alps near Hitler's retreat in the Obersalzberg above Berchtesgaden. Schneider was a guest of Hitler's, who declared that she was his favorite Actress. Later she and Albach-Retty separated and the marriage ended in divorce in 1945.
After the war, offers for movies initially were few. Schneider again began filming in 1948 and promoted her daughter's career with the joint appearance in the 1953 film When the White Lilacs Bloom Again directed by Hans Deppe, a typical 1950s Heimatfilm which was the film debut of 14-year-old Romy Schneider. In the same Magda Schneider married the Cologne restaurant owner Hans Herbert Blatzheim.
Magda Schneider arranged further appearances with her daughter in several movies such as Mädchenjahre einer Königin (Victoria in Dover), the films of the Sissi trilogy based on the life of Empress Elisabeth of Austria, with Romy Schneider starring in the title role and Magda Schneider playing the role of her mother Princess Ludovika of Bavaria, and in the 1958 film Die Halbzarte (Eva). Magda Schneider's role in the 1933 film Liebelei was also played by her daughter, Romy Schneider, in the 1958 remake Christine.
In the 1960s, Magda Schneider also starred in TV series. She died in 1996 at her house in Schönau near Berchtesgaden, Bavaria.