Auge descended from divine ancestry. Her father was Aleus, the grandson of Arcas, who was the son of Zeus and Callisto. Aleus was the king of Arcadia and was said to have been the founder of the cult of Athena Alea.

According to the mythographer Apollodorus, Auge's mother was Neaera, the daughter of Pereus. By Heracles she became the mother of the hero Telephus.

Many competing accounts survive. The earliest, an Archaic fragment of the Hesiodic Catalogue of Women, simply has Auge arrive in Mysia, where the gods command King Teuthras to receive her; in this version Teuthras raises Auge as a daughter and Heracles encounters her there.

Later accounts place the seduction in Arcadia. Hecataeus reported that Heracles used to have sex with Auge whenever he came to Tegea; Pausanias relates that when Aleus discovered the pregnancy he shut mother and child in a chest and threw it into the sea, and the chest made its way from Arcadia to the Caicus river in Asia Minor, where the local king Teuthras married Auge.

Sophocles wrote a tragedy, the Aleadae ("The Sons of Aleus"), now lost. Drawing on it, the orator Alcidamas reports that Aleus had been warned by the Delphic oracle that any son of Auge would kill Aleus' own sons, so he made her a priestess of Athena, bound to remain a virgin on pain of death. When Heracles, entertained by Aleus in the temple, became enamored of Auge and while drunk had sex with her, the pregnancy was discovered and Aleus gave her to Nauplius to be drowned. On the way to the sea Auge gave birth to Telephus on Mount Parthenion, and Nauplius sold mother and child to the childless Teuthras, who married Auge and adopted Telephus. A fragment suggests that in Sophocles' own version the newborn Telephus was instead abandoned on Mount Parthenion, where a deer suckled him.

Euripides wrote a play Auge, now lost but reconstructed largely from Moses of Chorene. In it a drunken Heracles, during a festival of Athena, rapes the priestess Auge as she leads the dances of the nocturnal rites. She gives birth secretly in Athena's temple at Tegea and hides the child there; once discovered, Aleus orders Telephus exposed and Auge drowned, but Heracles returns and apparently saves them, the play perhaps ending with the assurance that Auge and Telephus would become wife and son to Teuthras.

Strabo gives a version close to Pausanias': after learning of her ruin by Heracles, Aleus placed Auge and Telephus in a chest and cast it into the sea, where it washed up at the mouth of the Caicus, and Teuthras married Auge and adopted Telephus.

Later mythographers added variations. Diodorus Siculus notes that Aleus did not believe Auge when she named Heracles as the father, and that, after she gave birth near Mount Parthenion, Nauplius gave her to some Carians who took her to Mysia and handed her to Teuthras. Apollodorus states that Heracles did not know Auge was Aleus' daughter; she delivered secretly in Athena's temple and hid the baby there until a famine and an oracle-driven search exposed her. Apollodorus gives conflicting orders for her fate — in one place to sell her far away, elsewhere to put her to death — but in either case Nauplius instead gave Auge to Teuthras, who married her.

Accounts differ over where Telephus was born. In the Catalogue of Women he is born in Mysia; in Euripides, Strabo and Alcidamas the infant arrives with Auge in Mysia and is adopted by Teuthras. In other versions Telephus is abandoned on Mount Parthenion — either by Aleus, or by Auge as Nauplius takes her toward the sea — yet he is suckled by a deer, found, and raised by King Corythus or his herdsmen.

Seeking his origins, Telephus consulted the Delphic oracle, which sent him to Mysia, where he was reunited with Auge and adopted by Teuthras. Hyginus, drawing on an older tragic source, has Auge flee to Mysia after abandoning the child and become Teuthras' adopted daughter rather than his wife. When Telephus arrives, Teuthras promises him the kingdom and "his daughter Auge" in marriage if he defeats his enemy Idas. Telephus succeeds, but Auge — still faithful to Heracles — attacks her unrecognized son with a sword in the wedding chamber. The gods send a serpent between them, making her drop the blade; as Telephus moves to kill her she calls out to Heracles for rescue, and so Telephus recognizes his mother.

Pausanias names Auge among the figures in the Nekyia ("Underworld"), the great mural by Polygnotus in the Lesche of the Knidians at Delphi, though his identification of her has been questioned. The earliest certain representation of Auge appeared on the frieze of the temple of Athena Alea at Tegea (finished c. 350–340 BC), where inscriptions confirm that Auge and Telephus were shown on the metopes; Pausanias also reports a portrait painting of Auge at the same temple.

At Tegea's temple of Eileithyia, goddess of childbirth, Pausanias describes an image of Auge on her knees, marking where she "fell on her knees" and gave birth to Telephus while being taken to the sea by Nauplius. According to Pausanias the tomb of Auge was still shown at Pergamon — where the Attalids venerated Telephus as a founding hero — described as a mound of earth on a stone basement, surmounted by a bronze figure of a naked woman.

Auge figures prominently in the Telephus frieze of the 2nd-century BC Great Altar of Pergamon, which depicts her being seen by Heracles in Athena's sanctuary, waiting shrouded and mournful as carpenters build the vessel in which she will be cast adrift, being found on the shore by Teuthras, establishing Athena's cult, arming Telephus, being given to him in marriage, and finally recognizing and being recognized by her son. Pompeian frescoes of the 1st century AD depict Auge being raped while washing clothing at a spring.