Marie was born on January 26, 1907 to a Jewish family, and like many other psychologists of her time, grew up in Austria where oppression was rampant.  This was a major factor of influence on her life.  She attended the Pedagogical Academy of Vienna and the Doctoral program at the university of Vienna. She received a Doctor of Philosophy degree in 1933.

She was involved in the Austrian socialist youth movement and the Social Democratic Party.  She was arrested for her underground participation and the political implications of her research.

In 1949, she became an associate professor at New York University.

Most of her studies include the psychological effects of unemployment. She identified two psychological burdens of unemployment: the undermining of social status and identity, and
exclusion from the purposes of the larger society. She was awarded a Pinsent-Darwin Studentship At Cambridge University which allowed her to continue research on factory workers' social norms. In the united states Jahoda worked in the research department of the American Jewish Committee where she dealt with racial prejudice, and she coauthored a book on emotional disorders and prejudice.

She contributed to the meaning of positive mental health as well as introduced a four year approach to training psychology students and developed the first department of social psychology in Britain.