Born April 8, 1920, in Harlem, New York City, to West Indian parents. She began studying piano as a child. As a teenager she came to the attention of Teddy Wilson and his wife, the composer Irene Kitchings Wilson. Through their influence, one of McRae’s early songs, "Dream of Life", was recorded by Wilson’s longtime collaborator Billie Holiday.
By the late 1940s she was well known among the modern jazz musicians who gathered at Minton's Playhouse, Harlem's most famous jazz club, where she was the intermission pianist. But it was while working in Brooklyn that she came to the attention of Decca’s Milt Gabler. Her five year association with Decca yielded 12 LPs.
The musicians she sang with include Benny Carter, Mercer Ellington, Count Basie, Sammy Davis Jr., Dave Brubeck, and Louis Armstrong. As a result of her early friendship with Billie Holiday, she never performed without singing at least one song associated with Lady Day.
Carmen succumbed on November 10, 1994.