Yalow was born in New York City and educated at Hunter College and at the University of Illinois, where she obtained her PhD in nuclear physics in 1945. From 1947 to 1987 she worked at the Veterans Administration Hospital in the Bronx as a physicist and, from 1968 to 1987, she also held the post of research professor at the Mount Sinai School of Medicine. She retired in 1987

In the 1950s, working with Solomon Berson, Yalow developed the technique of radioimmunoassay (RIA), which permits the detection of extremely small amounts of hormone. The technique involves taking a known amount of radioactively labeled hormone, together with a known amount of antibody against it, and mixing it with human serum containing an unknown amount of unlabeled hormone. The antibodies bind to both the radioactive and normal hormone in the proportions in which they are present in the mixture. It is then possible to calculate with great accuracy the amount of unlabeled hormone present in the original sample; using this technique, amounts as small as one picogram (10^–12 g) can be detected.

This technique enabled Roger Guillemin and Andrew Schally to detect the hypothalamic hormones; Yalow, Guillemin, and Schally shared the Nobel Prize for physiology or medicine in 1977.