Sibylle Pietzsch was born in Dresden on October 29, 1903 to architect Martin Pietzsch (Deutscher Werkbund) and Fanny Clauss Pietzsch. Her father also headed the Dresden Academy.
Her family was prosperous, including two older sisters and an older brother. She left her secondary education in the Municipal Lyceum at Dresden‐Neustadt at 16. She attended the graduate schools of the Universities of Leipzig and Frankfurt, but never finished a university degree.
After working at a variety of jobs (including clerical work for Leo Frobenius in 1923), she became an actress, performing on stage and in a couple of films. While performing she went under the stage name "Sibyl Peech". In 1929, she married the Frankfurt intellectual and industrialist Carl Dreyfuss, a close friend of social philosopher Theodor Adorno.
In 1931, she left Frankfurt for Berlin, working as a scriptwriter and editor for Tobis Film Berlin. There she met the former Bauhaus professor, artist, and photographer László Moholy-Nagy (1895–1946) who was trying to get support for what would become his most famous film, A Lightplay black white gray. They became a couple by 1932, and had a daughter Hattula the next year, 1933.
Due to the rise of Nazism, László Moholy-Nagy worked for a year in Amsterdam in 1934, while Sibyl and Hattula remained in Berlin. The family reunited in London in 1935, where the couple formally married. A second daughter, Claudia, was born in 1936.
In 1937, the family emigrated to the United States, settling in Chicago. There, Moholy-Nagy assisted her husband in opening the New Bauhaus in October 1937, which was sponsored by the Association of Arts and Industries. After the New Bauhaus closed in June 1938, Moholy-Nagy helped her husband open his own school, the School of Design in Chicago in February 1939. In 1944 this school was reorganized and renamed the Institute of Design. Her husband died in November 1946 (ten years later, the Institute of Design became a department of the Illinois Institute of Technology, IIT Institute of Design). She finished copyediting her late husband's book Vision in Motion, which was published in 1947.
After her husband's death, Moholy-Nagy decided to become an architectural historian and teacher, beginning a productive career publishing many articles and books. Her writings built on knowledge from her father, and from her friendships with Walter Gropius and Sigfried Giedion, who she had met through her husband. Although she lacked formal credentials, her deep knowledge of architectural history allowed her to secure successive teaching positions in Chicago, Peoria, San Francisco, and Berkeley.
In 1951, Moholy-Nagy was hired as associate professor of architecture history at Pratt Institute in New York City. She taught courses on such subjects as urban history and design, becoming Pratt's first female full professor in 1960. She became a respected and acclaimed teacher, a commanding classroom presence using her experiences in acting. In spite of this, she retained a secret insecurity about her lack of extensive formal university training.
Moholy-Nagy resigned in 1969 over a conflict with other faculty about the future direction of the school, then became a visiting professor at Columbia University in 1970.