Lillie's early embryological research focused on the beginning stages of development in invertebrates and egg cleavage. Cleavage is the term for the division of cells in an early embryo. Between the years 1910 and 1921, his research focused on fertilization in a type of annelid, scientific name Nereis limbata and the sea urchins Arbacia punctulata, Stronglyocentrotus franciscanus, and S. purpuratus. Lillie's research argued that the substances fertilizin and antifertilizin were secreted by the egg and sperm. This work was significant because he applied concepts used within immunology to fertilization by proposing that gametes interacted similarly to antibodies and antigens.
Lillie retired from the University of Chicago in 1935; however, he continued his research tirelessly. He served as the president of the National Academy of Sciences from 1935-1936 and as the chairman of the National Research Council from 1935 to 1936.