Ian Anderson was born in Dunfermline, Fife, Scotland, the youngest of three siblings. His father, James Anderson, ran the RSA Boiler Fluid Company in East Port, Dunfermline. Anderson spent the first part of his childhood in Edinburgh. He was influenced by his father's big band and jazz records and the emergence of rock music, but was disenchanted with the "show biz" style of early American rock and roll stars like Elvis Presley.
His family moved to Blackpool, Lancashire, England, in 1959, where he was educated at Blackpool Grammar School. In a 2011 interview, Anderson stated that he was asked to leave grammar school for refusing to submit to corporal punishment (still permitted at that time) for some serious infraction. He went on to study fine art at Blackpool College of Art from 1964 to 1966 while living in Lytham St Annes.