Born in Chicago, Illinois, Stanley was the youngest of four children of English parents Robert S. and Maria (née Capewell) Muggeridge who had immigrated from England in 1887.

According to Joel Whitman, her most successful early recordings included "My Mammy" (1921), "Sweet Indiana Home" (1922), both written by Walter Donaldson; she also recorded other Walter Donaldson songs including "My Little Bimbo Down on a Bamboo Isle" (1920), "Dixie Highway" (1922), "Carolina in the Morning" (1922), "Back Where The Daffodils Grow" (1924), and "Don't be angry with me" (1926).

She recorded the Paul Whiteman and Fred Rose composition "Flamin' Mamie" on October 5, 1925, and released it as Victor 19828-A accompanied on ukulele by Billy "Uke" Carpenter who provided "jazz effects".

Around 1931 Stanley moved to London, where she made more records for HMV from 1934 through 1937, and once confided "strictly entre nous" that she unwittingly ended her own romance when she introduced Wallis Simpson to Edward, Prince of Wales, at the home of Thelma, Lady Furness.

She died in 1982 in Los Angeles, California, aged 89, and was buried (under the name Aileen Stanley Muggeridge) at Forest Lawn Memorial Park, Glendale.