Priestley was born at 34 Mannheim Road, Manningham, which he described as an "extremely respectable" suburb of Bradford.
His father was a headmaster. His mother died when he was just two years old and his father remarried four years later. Priestley was educated at Belle Vue Grammar School, which he left at sixteen to work as a junior clerk at Helm & Co., a wool firm in the Swan Arcade. During his years at Helm & Co. (1910–1914), he started writing at night and had articles published in local and London newspapers. He was to draw on memories of Bradford in many of the works he wrote after he had moved south, including Bright Day and When We Are Married. As an old man he deplored the destruction by developers of Victorian buildings in Bradford such as the Swan Arcade, where he had his first job.
Priestley served in the army during the First World War, volunteering to join the 10th Battalion, the Duke of Wellington's Regiment on 7 September 1914, and being posted to France as a Lance-Corporal on 26 August 1915. He was badly wounded in June 1916, when he was buried alive by a trench-mortar. He spent many months in military hospitals and convalescent establishments, and on 26 January 1918 was commissioned as an officer in the Devonshire Regiment, and posted back to France late summer 1918. As he describes in his literary reminiscences, Margin Released, he suffered from the effects of poison gas, and then supervised German prisoners of war, before being demobilised in early 1919.
After his military service, Priestley received a university education at Trinity Hall, Cambridge. By the age of 30 he had established a reputation as an essayist and critic. His novel Benighted (1927) was adapted into the James Whale film The Old Dark House (1932); the novel has been published under the film's name in the United States.