She was 67.
Children Ben, Pema and Annabel were with her, as were close friends.
"Our beloved mother Lynn Rachel passed away peacefully after a seven year journey with breast cancer," Redgrave's children said in a statement Monday.
"She lived, loved and worked harder than ever before. The endless memories she created as a mother, grandmother, writer, actor and friend will sustain us for the rest of our lives. Our entire family asks for privacy through this difficult time."
Her death comes a year after her niece Natasha Richardson died from head injuries sustained in a skiing accident and just a month after the death of her older brother, Corin Redgrave.
The youngest child of Michael Redgrave and Rachel Kempson, Lynn Redgrave never quite managed the acclaim - or notoriety - of elder sibling Vanessa Redgrave, but received Oscar nominations for "Georgy Girl" and "Gods and Monsters," and Tony nominations for "Mrs. Warren's Profession," "Shakespeare for My Father" and "The Constant Wife."
In recent years, she also made appearances in the television shows "Ugly Betty," "Law & Order" and "Desperate Housewives."
"Vanessa was the one expected to be the great actress," Lynn Redgrave told The Associated Press in 1999.
"It was always, 'Corin's the brain, Vanessa the shining star, oh, and then there's Lynn."'
In the theater, Redgrave, with her striking dark red hair, often displayed a sunny, sweet and open personality, much like her ebullient offstage personality.
It worked well in such shows as "Black Comedy," her Broadway debut in 1972 and again two years later in "My Fat Friend," a comedy about an overweight young woman who sheds pounds to find romance.
Tall and blue-eyed like her sister, she was as open about her personal life as Vanessa has been about politics. In plays and in interviews, Lynn Redgrave confided about her family, her marriage and her health.
She acknowledged that she suffered from bulimia and served as a spokeswoman for Weight Watchers. With daughter Annabel Clark, she released a 2004 book about her fight with cancer, "Journal: A Mother and Daughter's Recovery From Breast Cancer."
Redgrave was born in London in 1943 and despite self-doubts pursued the family trade.
She studied at London's Central School of Speech and Drama and was not yet 20 when she debuted professionally on stage in a London production of "A Midsummer's Night Dream."
Like her siblings, she appeared in plays and in films, working under Noel Coward and Laurence Olivier as a member of the National Theater and under director/brother-in-law Tony Richardson in the 1963 screen hit "Tom Jones."
"Before I was born, my father was a movie star and a stage star," the actress told the AP in 1993.