From 1978 to 1981 she was mainly concerned with performance art, from 1981 to 1988 mainly with video art. She frequently appears in her videos, e.g. Romeo is bleeding (1982). In 1984, her work was included in The Luminous Image, an international exhibition of video art at the Stedelijk Museum. She was also a member of the Time Based Arts Foundation, an organization of video artists. Since 1988 she has focused on installations with photography, sound and video as key components. Her work has been described as "a rhetorical corruption of the icons of popular culture" which is at times both "shocking" and "poignantly beautiful". She herself has said that her work often involves overcoming her own fears.
Her work has been exhibited at the Museum Ludwig in Cologne, The Centre Georges Pompidou in Paris, The Torch Gallery in Amsterdam, The Institute of Contemporary Art in New York City and the Metropolitan Museum of Photography in Tokyo.
Lydia Schouten has also done work for public spaces, such as the Monument voor de Verdronken Dorpen in Zeeland ('Monument to the Drowned Villages') in Colijnsplaat.