Dolley Payne was born in Guilford County, North Carolina, on May 20, 1768. Her father, John Payne, and her mother, Mary Coles, were both Quakers. The two raised their children strictly under the Book of Discipline (Quakerism). The family moved from North Carolina to Hanover County, Virginia, where she spent most of her childhood with her parents and seven siblings. Walter, William Temple, Lucy, Anna, Mary, John, Isaac, Dolley, and her parents lived in their large Virginia plantation with many servants helping them live an enjoyable lifestyle.

John Payne decided to move the family to Philadelphia, Pennsylvania when Dolley Payne was a teenager. After the war, he sold his plantation and freed all of his slaves in order to pay for the move and his new home. Mr. Payne felt inclined to move to Philadelphia due to its popularity at the time; there was much talk about the influence of American government being established there. He also wanted to find a better education for his children by moving to Philadelphia. Payne became a starch merchant, but later his business failed, and he died poor in 1792. Madison's mother, Mary, opened their home to boarders. Thomas Jefferson and Aaron Burr were noted guests at the Payne home.

Mary Coles Payne moved back to Virginia with her daughter, Lucy, who had married the nephew of George Washington, George Steptoe Washington. During this time, Dolley Payne met a successful young Philadelphia attorney. On January 7, 1790, Dolley Payne wed John Todd. Dolley Todd gave birth to John Payne Todd in 1790 and William Temple Todd in 1792. In fall of 1793, the yellow fever plagued Philadelphia. Dolley Todd and her children moved to the outskirts of Philadelphia in order to avoid the plague while John stayed behind. All eventually fell ill. When Dolley Todd finally recovered herself, her husband and her youngest son, William, had died.

At the young age of 25, Dolley Todd, now a widow, attracted many suitors. Her beauty complimented her bubbly personality, and many men were eager to be acquainted with her. In May 1794, James Madison asked his friend Aaron Burr to introduce Dolley Payne to him. Shortly after meeting, he wrote her letters asking her for her hand in marriage. Dolley Todd, however, was not persuaded initially. Family and friends sent several convincing letters, leading her to wed James Madison on September 15, 1794. Dolley Madison was ostracized from the Society of Friends (Quakers) for marrying outside of her faith, which ended 26 years of dedication to a very simple and humble lifestyle.

In 1797, James Madison retired from politics. The Madisons moved to Orange County, Virginia, to the family estate to live quiet lives as planters. However, in 1801, Thomas Jefferson was inaugurated as the third President of the United States. He asked James Madison to be his Secretary of State. He accepted, and the Madisons moved to Washington D.C. Dolley Madison spent much of her time at the White House after Jefferson asked her to be an Official White House Hostess. Jefferson had been quite fond of the charming and captivating personality she portrayed from her younger years when he lived in the Payne boarding home. Madison took quickly to her role, fashioning elegant dresses and throwing social parties for White Houses guests. At the time, Thomas Jefferson was a widower, and his daughters were living with other family members. He was also working hard to establish a new republican society based on equality; this meant that he wanted to rid himself of traditional rules of etiquette and procedure. Dolley Madison was a major influence in helping Thomas Jefferson to invent new standards of "dress and etiquette." Her influence during Jefferson's term helped influence her husband's political career. As the most important woman in Washington society at the time, she was a figure whom many people respected and came to love. In 1808, James Madison was elected President of the United States. In 1809, Dolley Madison became First Lady.

Her charm continued to entertain White House guests throughout her husband's first and second terms. She also became involved behind the scenes politically. During the War of 1812, the British invaded Washington D.C. in August 1814. Dolley Madison is a noted heroine of the war. She was able to save many important documents and valuables inside of the White House, including the Gilbert Stuart portrait of George Washington, before the British reached Washington D.C.

In 1817, Madison's term ended, and the couple retired to their Virginia plantation, Montpelier. Although childless, the two endured a happy relationship until James's death on June 28, 1836. She returned to Washington to spend the rest of her life enjoying social and political events until her death on July 12, 1849, at the age of 81. She was buried in the Congressional Cemetery, but was later moved to Montpelier to rest in peace beside her husband.