Born in Sculcoates, Kingston upon Hull in 1903 (although she later would claim 1904 or 1905 as her year of birth, including on her petition for naturalization as a United States citizen, giving 1904 as the year), Mackaill lived with her father after her parents separated when she was around eleven years old. She attended Thoresby Primary School. As a teenager, Mackaill ran away to London to pursue a stage career as an actress.

By 1920, Mackaill had begun making the transition from “Follies Girl” to film actress. That same year she appeared in her first film, a Wilfred Noy-directed mystery, The Face at the Window. Mackaill also appeared in several comedies of 1920 opposite actor Johnny Hines. In 1921, she appeared opposite Anna May Wong, Noah Beery and Lon Chaney in the Marshall Neilan-directed drama Bits of Life. In the following years, Mackaill would appear opposite such popular actors as Richard Barthelmess, Rod La Rocque, Colleen Moore, John Barrymore, George O’Brien, Bebe Daniels, Milton Sills and Anna Q. Nilsson.

In 1924, Mackaill rose to leading-lady status in the drama The Man Who Came Back, opposite rugged matinee idol George O’Brien. Her role of the nightclub chanteuse Marcelle catapulted Mackaill into a genuine Hollywood star. In 1924, she also starred in the western film The Mine with the Iron Door, shot on location outside of Tucson, Arizona. That same year, the Western Association of Motion Picture Advertisers of the United States presented Mackaill with one of its WAMPAS Baby Stars awards, which each year honored thirteen young women whom the association believed to be on the threshold of movie stardom. Other notable recipients of the award in 1924 were Clara Bow, Julanne Johnston and Lucille Ricksen. Her career continued to flourish throughout the remainder of the 1920s, as she made a smooth transition to sound with the part-talkie The Barker (1928).

Mackaill was married three times. Her first marriage was to German film director Lothar Mendes, on November 17, 1926. They divorced in August 1928. On November 4, 1931, she married radio singer Neil Albert Miller. They divorced in February 1934. Her third and final marriage was to horticulturist Harold Patterson in June 1947. She filed for divorce in December 1948.

Mackaill became a naturalized United States citizen in 1926, giving 1904 as her year of birth, and her age as 22.

In September 1928, First National Pictures was acquired by Warner Bros., and her contract with First National was not renewed in 1931. Her most memorable role of this era was the 1932 Columbia Pictures B film release Love Affair with a young Humphrey Bogart as her leading man. She made several films for MGM, Paramount and Columbia before retiring in 1937 to care for her aging mother.

In 1955, Mackaill moved to Honolulu, Hawaii. She had fallen in love with the islands while filming His Captive Woman in 1929. Mackaill lived at the luxurious Royal Hawaiian Hotel on the beach at Waikiki as a sort of celebrity-in-residence and enjoyed swimming in the ocean nearly every day.

She occasionally came out of retirement to appear in roles for television, notably in two episodes of Hawaii Five-O in 1976 and 1980, which was filmed on location in Hawaii.

Mackaill resided in Honolulu, Hawaii, during the last 35 years of her life. She died there of liver failure in her room at the Royal Hawaiian Hotel on August 12, 1990. She was cremated and her ashes scattered off Waikiki Beach.