Reed was born in Philadelphia, Pennsylvania to comedy actor Roland Lewis Reed (1857–1901) and his wife, Joanna (née Sommer) Reed.
She is remembered for several outstanding stage productions, including The Shanghai Gesture, The Lullaby, The Yellow Ticket and The Wanderer. Her best remembered movie role was as Miss Havisham in the 1934 production of Great Expectations. In this version, however, Miss Havisham was changed from a completely insane woman to an eccentric, who did not wear her wedding veil constantly, and who dies peacefully rather than as a result of suffering burns in a fire.
In the 1950s Reed performed in several early television shows, such as The Philco Television Playhouse, Kraft Television Theatre and The United States Steel Hour. Her grandfather was John "Pop" Reed, a manager of the old Walnut Street Theatre, who donated his skull to be performed in future theatrical versions of Hamlet. Her father died in 1901 when Florence was 18 years old.
Afterward she and her mother came to New York City to seek a career in the theater. She made her first appearance on the stage at Proctor's Fifth Avenue Theatre in New York in 1904 where she gave a monologue by George M. Cohan. She stayed with the Fifth Avenue Theater for years honing her craft.
She also trouped the country with May Irwin in The Widow Jones and played Ophelia to E. H. Sothern's Hamlet. Reed appeared with John Barrymore in The Yellow Ticket (1914) which proved a popular play of the season. Her biggest stage success was as Mother Goddam in The Shanghai Gesture (1926).