Born in south London, Tilley worked for performance artist and club promoter Leigh Bowery as a cashier at his "Taboo" night club. Bowery introduced her to Lucian Freud in 1990 and she began posing for him the following year. During this time, she was also a full-time benefits supervisor at the Charing Cross jobcentre, a state-operated employment agency, and she eventually became manager there.
Freud painted several large nude portraits of Tilley, the first being Evening in the Studio (1993). Benefits Supervisor Sleeping, painted in 1995, was sold at auction in 2008 for £17 million ($33.6 million US) in New York City. In 2015, the 1994 painting Benefits Supervisor Resting sold for £35.8 million ($56.2million US). A fourth painting Sleeping by the Lion Carpet was painted in 1996. Freud also produced a number of etchings featuring Tilley, including Woman with an Arm Tattoo which Tilley sold in 2005.
In 1997, she published Leigh Bowery: The life and times of an Icon, a biography.