Newhart was born on September 5, 1929 at West Suburban Hospital in Oak Park, Illinois. His parents were George David Newhart (1899–1986), a part-owner of a plumbing and heating-supply business, and Julia Pauline (née Burns; 1901–1991), a housewife. His mother was of Irish descent and his father was of English, Irish, and German ancestry. One of his grandmothers was from St. Catharines, Ontario, Canada. Newhart has three sisters: Virginia, Mary Joan (a nun, who taught at the all-girls Carmel High School in Mundelein, Illinois), and Pauline.
Newhart was educated at Roman Catholic schools in the Chicago area, including St. Catherine of Siena grammar school in Oak Park, and attended St. Ignatius College Prep (high school), graduating in 1947. He then enrolled at Loyola University of Chicago from which he graduated in 1952 with a bachelor's degree in business management.
Newhart was drafted into the United States Army and served in the United States during the Korean War as a personnel manager until being discharged in 1954. Newhart briefly attended Loyola University Chicago School of Law, but did not complete a degree, in part, he says, because he was asked to behave unethically during an internship.