Sheridan Le Fanu was born at 45 Lower Dominick Street, Dublin, into a literary family of Huguenot, Irish and English descent. He had an elder sister, Catherine Frances, and a younger brother, William Richard. His parents were Thomas Philip Le Fanu and Emma Lucretia Dobbin.
Both his grandmother Alicia Sheridan Le Fanu and his great-uncle Richard Brinsley Sheridan were playwrights (his niece Rhoda Broughton would become a successful novelist), and his mother was also a writer, producing a biography of Charles Orpen. Within a year of his birth his family moved to the Royal Hibernian Military School in the Phoenix Park, where his father, a Church of Ireland clergyman, was appointed to the chaplaincy of the establishment. The Phoenix Park and the adjacent village and parish church of Chapelizod would appear in Le Fanu's later stories.
In 1826 the family moved to Abington, County Limerick, where Le Fanu's father Thomas took up his second rectorship in Ireland. Although he had a tutor, who, according to his brother William, taught them nothing and was finally dismissed in disgrace, Le Fanu used his father's library to educate himself. By the age of fifteen, Joseph was writing poetry which he shared with his mother and siblings but never with his father. His father was a stern Protestant churchman and raised his family in an almost Calvinist tradition.
In 1832 the disorders of the Tithe War (1831–36) affected the region. There were about six thousand Catholics in the parish of Abington, and only a few dozen members of the Church of Ireland. (In bad weather the Dean cancelled Sunday services because so few parishioners would attend.) However, the government compelled all farmers, including Catholics, to pay tithes for the upkeep of the Protestant church. The following year the family moved back temporarily to Dublin, to Williamstown Avenue in a southern suburb, where Thomas was to work on a Government commission.