Albert was born in the Prince's Palace of Monaco. He has ancestry from Italy, Ireland, Britain, the United States, Germany, France, Mexico, Belgium, and Monaco and is American-Monegasque by birth; he renounced American citizenship in his early adulthood. He was baptized on 20 April 1958, by Monsignor Jean Delay, archbishop of Marseille, in the Cathedral of the Immaculate Conception of Monaco, before being presented at the balcony of the Palace to the people of Monaco. His godmother was the Spanish queen Victoria Eugenia of Spain, and his godfather was Prince Louis de Polignac (1909–1996). Albert graduated with distinction from the Lycée Albert Premier, in 1976.
He was a camper and later a counselor for six summers at Camp Tecumseh, on Lake Winnipesaukee, Moultonborough, New Hampshire, in the 1970s. He spent a year training in various princely duties and enrolled at Amherst College, in western Massachusetts, in 1977 as Albert Grimaldi, studying political science, economics, music, and English literature; he also joined Chi Psi fraternity. He speaks French, English, German, and Italian.
He spent mid-1979 touring Europe and the Middle East with the Amherst Glee Club, and graduated in 1981 with a Bachelor of Arts degree in political science. Albert also undertook an exchange program with the University of Bristol, at the Alfred Marshall School of Economics and Management in 1979.
Prince Albert's mother was killed in a car accident in 1982 at age 52. In 2017, in In Depth interview with Graham Bensinger, the Prince stated that his mother's death was a 'traumatic' event for him and the family. He also revealed that his father was never the 'same man' after the loss.