In Episode 3, she will kill either Doug or Carley, depending on who the player saved in Episode 1. At this point the player can choose to abandon her on the side of the road and drive off in Kenny's RV, or they can hold her in custody for later. If the latter is chosen, after the group arrives at the train-site she will steal the RV and escape. Either way, she is never seen again.
Graphic Novel Connection
Telltale Games had originally intended the character to be Lilly Caul from the graphic novels. Soon after Robert Kirkman would release The Road to Woodbury which expands on the character of Lilly Caul, giving her a different backstory than the game's Lilly. As a result, Telltale removed all official references tying their Lilly to the graphic novels and she is now considered a different character who happens to be named Lilly.