Elizabeth Palay was born in New York City. She attended the High School of Performing Arts and received a Bachelor of Arts degree from Skidmore College. She worked in New York State and New York City government before following her lifelong desire to be an artist. At the Arts Students League of New York she studied color theory, drawing and painting and held the William Zorach Merit Scholarship.

Her first show was a two-person exhibition at the Soho Center for Visual Artists in New York in 1981, followed by other New York gallery shows and the acquisition of one of her large works by the Aldrich Contemporary Art Museum in Ridgefield, Connecticut. In 1990 she moved to northern California, continuing to paint and exhibit. Elizabeth Palay lives in Madison, Wisconsin and paints in her studio on State Street. Her European solo exhibition "Boje/Colors" was at the Galerija Mazuth in Zagreb, Croatia in 2010. In 2015, Gallery 800 UBD sponsored her retrospective show entitled "Jubilation:Decades of Color" in Madison. Her work is in many corporate and private collections and several of her works are currently on display at the University of Wisconsin President's Residence, the Brittingham House.