Holiday made her final public appearance in a concert at the Phoenix Theatre in New York City on May 25, 1959. She died in Metropolitan Hospital in New York City on July 17, 1959, of "congestion of the lungs complicated by heart failure." At the time of her death she had been under arrest in her hospital bed for illegal possession of drugs.

Holiday's early small-group recordings have been rereleased in several boxed sets under the general title Billie Holiday: The Golden Years. Her best later work is to be found in The First Verve Sessions, recorded in 1952 and 1954.

On March 6, 2000, Holiday was inducted into the Rock and Roll Hall of Fame in the Early Influences category. That category includes artists whose music predates rock and roll, but who inspired and had a strong effect on rock and roll music.