She was born as Helene Rosenbach in Przemysl, Galicia (now in Poland), where her father was president of the Jewish community. Because of the limitations on female education, she ran away to Vienna to study to be a physician. There in 1912 she married the psychiatrist, Felix Deutsch. She was the first woman assistant in the psychiatric department of Vienna University and later headed the female ward. After encountering the ideas of Freud, she gave up her academic career and was trained by Freud himself, becoming a leading figure of the second generation of analysts.
In 1924 Deutsch established in Vienna a psychoanalytic training institute which she headed until leaving for the USA in 1935. In the USA she was on the staff of the Psychoanalytic Institute in Boston. Her main field of study was on the female psyche, summarized in her two-volume Psychology of Women.