Issel was born in Batavia, Illinois, son of Robert and Elanor Issel, and grew up with sister Kathi and brother Greg. Robert Issel owned and operated Issel Painting & Decorating. Issel attended Batavia High School, graduating in 1967 as an All-American playing for Coach Don VanDersnick. 
Issel led Batavia to their first Sectional title as a senior, hitting the game winning shot against Naperville Central High School to win the title. As a senior, Issel averaged 25.8 points on Batavia's 26-3 team. 
Growing up in Batavia, Issel's backyard met up met up with his friend, Ken Anderson’s back yard. Anderson's father was a janitor at Batavia High School, and the Issel property on Harrison Street backed onto that of the Andersons' on Republic Road.  Growing up together, Issel and Anderson rode in Issel's red Ford convertible and frequented the Twin Elms restaurant. Later, Anderson and Issel would co-own a 782 farm in Kentucky. Another neighbor and teammate, Byron Von Hoff, played basketball and other sports at Batavia with Anderson and Issel. Anderson became a Quarterback with the Cincinnati Bengals and the 1981 NFL Most Valuable Player.  Von Hoff was the 21st pick of the New York Mets in the 1966
Amateur Baseball draft and pitched successfully in the minor leagues before an injury ended his career. Another teammate at Batavia was future NBA announcer Craig Sager, who was a freshman when Issel was a senior.  Said Issel of his Batavia teammates: “What Batavia instilled in all three of us –– myself, Kenny and Craig –– was a solid work ethic."
According to Sports Illustrated: Don VanDersnick showed Issel how to dunk by training him with a volleyball and had Issel him jump up and grab the rim 50 times each day at practice. Issel didn't start at Batavia High basketball until he was a junior, and considered himself fortunate that he had Don Vandersnick as his coach. saying, "If he'd told us that if we dove off a water tower it would make us better basketball players, there would have been a line waiting to do it."