The genus and specific names Liliensternus liliensterni are derived from the last name of count, amateur paleontologist, and medical doctor, Hugo Rühle von Lilienstern. This dinosaur was named in his honor for his furthering paleontology in Germany by founding a paleontological museum in his castle in Bedheim, Germany on 1 July 1934. Liliensternus was described by Friedrich von Huene in 1934. Because it was originally named by von Huene as a member of the genus Halticosaurus, the type species of the genus Liliensternus is Halticosaurus liliensterni; the combinatio nova is Liliensternus liliensterni
Liliensternus was approximately 5.15 m (16.9 ft) long, and may have weighed about 127 kg (280 lb). Other estimates suggest that Liliensternus was at best 5.2 m (17.1 ft) long and weighed 200 kilograms (441 pounds) at most. The remains of two specimens of Liliensternus together form a syntype series with inventory number MB.R.2175, and consist of the partial and fragmentary skeletons of at least two individuals, containing elements of the skull, the lower jaws, the vertebrae and the appendicular skeleton. The tibia (409 mm) is shorter than the femur (440 mm) in both Dilophosaurus and Liliensternus, unlike those of the smaller coelophysid taxa, such as Coelophysis. Paul (1988) noted that based on its appearance, Liliensternus could be considered to be an intermediate between Coelophysis and Dilophosaurus. Although the skull is not well known, most reconstructions have Liliensternus with a crest similar to that observed in Dilophosaurus. Its ilium (hip bone) is unusually short, as is the case with Dilophosaurus.
Rauhut et al. (1998) noted that the remains may represent a juvenile or subadult individual based on the presence of only two fused sacrals and the fact that the neurocentral sutures are still visible in the vertebrae.
In 1993 Gilles Cuny and Peter Galton described a new species that they assigned to this genus, Liliensternus airelensis. Other researchers began to notice differences between L. airelensis and the type species, L. liliensterni, and in 2007, Martin Ezcurra and Cuny assigned the material to its own genus, Lophostropheus.