She dresses and acts in a manner that is considered conventionally feminine, and likes "feminine" things, like wearing lipstick. And actual females. Main-character lesbians on TV tend to fall into this category more often, as it's often seen as "safer", unless the show is going for "edgy". They also often have things like long fingernails, unlike their more masculine counterpart.
A related term is "femme". However, the implication is that, while a "femme" would be attracted to a "butch", lipstick lesbians are attracted to others of the same type. Also note that in LGBT communities, lipstick lesbians tend to be described as 'more feminine' than average straight women or whose expression of femininity is 'over-the-top'. Ellen DeGeneres jokingly coined the term "chapstick lesbian" to describe those who fall somewhere in between the two extremes of "lipstick" and "butch".
The real life proportion of lesbians that are lipstick lesbians is somewhat lower than what one might expect from watching television. The reasons for this proportional over-representation can include Fanservice (because Girl on Girl Is Hot), wanting to avert the stereotype of Butch Lesbian (and the Unfortunate Implications that non-heterosexuals are "genderinverted"), wanting to present a lesbian character that won't "intimidate" viewers, and also wanting to avoid making said lesbian character's sexuality an excessively large issue by presenting her as a person who just happens to be attracted to other women.
Related to the opposite of Butch Lesbian, a high femme. Related to, and their frequent representation is perhaps a direct result of, Girl on Girl Is Hot. See Schoolgirl Lesbians, another form of catering to Yuri Fans via character type. Lipstick lesbians who don't take the "girliness" to extremes can be seen as Distaff Counterpart to the male Straight Gay, while ones who do, depending on your perspective, can either be seen as counterparts to the Manly Gay (in terms of over-emphasizing the "expected" characteristics of their sex) or the Camp Gay (in terms of going whole-hog into "femininity").
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Anime & Manga
Michiru Kaioh from Sailor Moon; however, with her girlfriend being the more masculine Haruka, some might say it would be more accurate to describe her as 'femme'. Naturally, most international dubs of the first animeattemptedto censor this aspect of her character.
Lavinia from Soukou No Strain. Bunny suit, anyone? And let's not get started on episode seven.
Akko and Mari from Girl Friends. Particularly prevalent since much of the plot includes shopping for clothes, getting makeovers, and hairstyling.
Hazuki from Yami to Boushi to Hon no Tabibito, who has long billowy black hair, a pretty seifuku, stunning blue eyes, and is just slightly gayer than an entire pride parade reenacting the Rocky Horror Picture Show. The object of her affections is even more feminine, though bi- or pan-sexual.
Yamato from Loveless acts as the more "femme" of the female Zeroes, as opposed to her fighter Koya.
Nobara Yukinokouji from Inu X Boku SS is an attractive woman who works as a bodyguard, and tells Ririchiyo that she would love to be in a sexual relationship with her. She also demonstrates her more feminine aspects by helping Ririchiyo with her hair in episode 3.
Krista in Attack on Titan, if her interactions with Ymir are to be believed.
DC Comics's current Batwoman is a Lipstick Lesbian. She was 'outed' in a cunningly-written magazine interview several months before the character premiered, and her first comic appearance was in a stunning party dress that caused jaws to drop both in and out of the comic.
Her portrayal changed somewhat between 52 and her stint in Detective Comics. In the latter, she was established as having been in the army and wearing a wig in costume to hide her short hair.
Sydney Krukowski from Dykes To Watch Out For refers to herself as femme, although the way she looks and acts isn't that different from her girlfriend Mo (who is sometimes considered butch.)
Sarah Rainmaker, from Gen13, although it took a while for her to truly come out as one. She is often actually seen attending protests and demonstrations on behalf of the LGBT community and has a tendency to lecture her teammates when they (often) fail to live up to her standards of political correctness. (Usually without much success.)
Gianna of Luminosity is this to the extent that no one notices until a female vampire mate-bonds to her. This was intentional on her part, though she doesn't change at all when she gets in an open relationship.
For Yoruichi and Soi Fon fan-fics, Yoruichi is usually portrayed as this out of the pair, at least in terms of aesthetics. In terms of personality, Soi Fon tends to be the submissive partner.
Marv: Lucille's my parole officer. She's a dyke, but God knows why. With that body of hers she could have any man she wants.
Megan and Hilary in But I'm a Cheerleader. Megan is the titular cheerleader, and Hilary, as the product of an all-girl boarding school, is prone to clothing reminiscent of school girl uniforms.
Goth couple Medea Yarn and Hellabent from Otto; or up with dead people they wear long frilly dresses, make up and act very feminine all the time.
Improbably, as is pointed out by some of the characters - including herself, Jacyl from Black Dogs. As an elven scout she's often weeks or months on end in the wilderness with no hot baths and limited pack space, yet she needs to carry several different outfits and makeup along with her. Her former guardian remarked that he first came across her while her house was burning down and that despite this, she was attempting to save her dresses. Her partner is the Butch Lesbian, Sinai.
Felicity Worthington, from the Gemma Doyle Trilogy, behaves like an proper Victorian girl. There are very few hints about her true sexual orientation (subtext only). However, it is revealed in The Sweet Far Thing that she is in fact a lesbian and was in love with Pippa Cross. Probably due to the attitude of the time, she views this part of her with contempt and is in the closet about it; she seems to think that this means there is something wrong with her. Pippa may be another example, although she also expresses interest in boys, so she's probably closer to Bi the Way or If It's You, It's Okay.
Several in Mary Renault's work: Valentine in Purposes of Love, Helen in The Friendly Young Ladies, Lasthenia in The Mask of Apollo. Valentine, though, is bisexual, or basically straight but going through a phase. Helen, on the other hand, is more certain of her lesbianism than is her butch lover, Leo.
Simona Ahrnstedt has an example of this in her novel "De skandalösa", when the beautiful Girly Girl Venus Dag och Natt turns out to be gay.
Willow (after she comes out in Season 4) and Tara. Willow is prone to lots of "girly" colors in her clothes, and Tara seemed to prefer dresses.
Also Kennedy. She wears her hair to the middle of her back.
The Firefly episode "War Stories" has Inara taking a female client (also of the Lipstick variety). According to Kaylee, this isn't the first time. Both Inara and the client wear fancy, elegant clothing.
Tipping the Velvet had Kitty (when she wasn't dressed as a man for her Music Hall act), Mrs. Lethaby, Florence and Zena. The protagonist Nan starts off as a lipstick lesbian but becomes increasingly butch as the story continues.
DC Jo Masters from The Bill has been described like this, although she doesn't really advertise it. Rather large in the chest department, she had Eddie (the male crime scene examiner) ask her on a date. She told him they'd go for a drink and she'd explain.
Out Of Practice, a failed show on CBS, had a central character who screamed this trope to the heavens. She dressed provocatively, threw herself at women, and couldn't open her mouth without bringing up the topic of her sexuality.
After her coming-out storyline, Beth Jordache from Brookside (played by Anna Friel) was labeled as a "lipstick lesbian" by the British media, receiving equal attention from young women and young men.
Thirteen on House - or at least lipstick bisexual. She wears her hair long wears stylish clothing.
ER's Kerry Weaver is more of a chapstick lesbian—attractive, feminine, but short-haired and abrasive—but her companions tend to fit this trope. (With the slight exception of Sandy, who despite her decidedly feminine looks, has a unisex name, is a firefighter, and like Kerry, an abrasive personality).
On Glee, Santana is a lipstick lesbian and Brittany is a lipstick bisexual. They're both cheerleaders and when out of uniform, they both prefer very feminine clothes. Santana does mention being a bit of a tomboy as a kid though.
Lucy in Dracula is a lipstick lesbian, while Lady Jayne is a lipstick bisexual. Lucy in particular wears copious amounts of ultra-feminine dresses, mostly in varying shades of pink and purple.
More recently, main character Penny is a Lipstick Bisexual, while the other main character (and her girlfriend) Aggie is a lesbian but too much of a hipster to really count as 'Lipstick'.
Kanaya from Homestuck, the troll's "bugging and fussing and meddling" Team Mom, is a lesbian and the only troll with an interest in fashion. Literally a Lipstick Lesbian in that her main weapon is a lipstick that sometimes transforms into a chainsaw.
Girly lesbians are the dominant type in Girls with Slingshots. All of the major lesbian or bisexual characters are prone to curves, makeup, and girly interests. Butch lesbians exist, but they have their own hangouts (one of which Jamie visits during her Coming-Out Story arc).
Discussed on an episode of King of the Hill, where a subplot involved Hank's driver's license now saying he was a woman. Peggy's hairdresser commented that if they were a lesbian couple, Peggy would be a lipstick lesbian, which is "the best kind".
There has been much controversy over the possibility of lesbian subtext in Adventure Time, specifically between Princess Bubblegum and Marceline. If this is to be believed, Princess Bubblegum would fit this trope.