Born Estelle Goodwin in Lee, Kent, she decided at the age of five that she wanted to be an actress. With her mother's support, but her father's disapproval, she trained with the Liverpool Repertory Company, before moving on to a career in London's West End.

She moved to the United States in 1916 and made her Broadway debut, and until the beginning of the 1930s she divided her time between New York and London. Throughout her career, her first love was the theatre and as the years passed she appeared less frequently in London, but became a prolific performer on Broadway. Her many successes include A Successful Calamity (1917), A Little Journey (1918), Spring Cleaning (1923), The Distaff Side (1934), The Importance of Being Earnest (which she also directed, 1939), When We Are Married (1939), Ladies in Retirement (1940), The Pirate (1942), Ten Little Indians (1944), Lady Windermere's Fan (1947) and The Madwoman of Chaillot (1948).

Like many stage actors of her era, she expressed a distaste for films and resisted the offers she received during the 1920s. She made her film debut in 1931 in Night Angel but her scenes were cut before the film's release. Her official film debut came in 1933 in The House of Trent and Quality Street (1937) was her first role of note. She made no cinematic films during the 1940s but expressed a willingness to participate in the new medium of television, starring in a television production of Blithe Spirit in 1946. During the 1950s she appeared more frequently in television that she did in film in such series as Robert Montgomery Presents, Alfred Hitchcock Presents and The Donna Reed Show. Her few films from that period include The Glass Slipper (1955) and The Swan (1956).

Her other film credits include Darby O'Gill and the Little People (1959), The Misfits (1961), The Notorious Landlady (1962), Dead Ringer (1964), Camelot (1967) and The Producers (1968). She later denigrated the last film, saying she couldn't imagine why she had done it except for the money; nonetheless it is now considered a comedy classic and contains one of her best remembered performances.

Her other work for television included guest roles in memorable episodes of The Twilight Zone, Dr. Kildare, Perry Mason, The Man from U.N.C.L.E., The Name of the Game, Bewitched, Batman, Love, American Style, Cannon and Police Story.

Winwood's final film appearance was at the age of 93 in Murder by Death (1976), as Elsa Lanchester's character's ancient nursemaid, although in real life they were rivals who engaged in a vinegary exchange of insults captured by author Kenneth Anger in his book Hollywood Babylon. In this movie she joined other veteran actors spoofing some of the most popular detective characters in murder mysteries on film and television (e.g. Dick and Dora Charleston, Jessica Marbles, etc). When she made her final television appearance in a 1979 episode of the series Quincy, she officially became, at age 96, the oldest actor working in the United States, beating out fellow British actress, Ethel Griffies, who worked until her 90s almost until she died. Winwood ultimately achieved an 80-year career on the stage from her debut at the age of 16 until her final appearance at age 96. At the time of her death at the age of 101, she was the oldest member in the history of the Screen Actors Guild.

On her 100th birthday, she was asked how she felt to have lived so long. Her response was, "How rude of you to remind me!" Bette Davis, an old co-star, was photographed at Winwood's side on the occasion in Hollywood.

She was very good friends with libertine actress and outsized personality Tallulah Bankhead until Bankhead's death in 1968. Also, Winwood was married 4 times, at least once to a gay man (Guthrie McClintic, who was also married to lesbian actress Katharine Cornell) but had no children; another of her husbands was a brother of the famous Welsh actor Edmund Gwenn.

Estelle Winwood died in her sleep in Woodland Hills, California in 1984 aged 101. She was interred in the Westwood Village Memorial Park Cemetery in Los Angeles.