Sutcliffe's father, Charles Sutcliffe (25 May 1905 – 18 March 1966), was previously married to his first wife Martha with whom he'd already had four children. He was a senior civil servant, who moved to Liverpool to help with wartime work in 1943, and then signed on as a ship's engineer, and so was often at sea during his son's early years. His mother, Millie, was a schoolteacher at an infants' school. Sutcliffe had two younger sisters, Pauline and Joyce, but also had three older half-brothers, Joe, Ian, and Charles, as well as an older half-sister Mattie, from his father's first marriage.
Sutcliffe was born at the Simpson Memorial Maternity Pavilion Hospital in Edinburgh, Scotland, and after his family moved to England, he was brought up at 37 Aigburth Drive in Liverpool. He attended Park View Primary School, Huyton (1946–1951), and Prescot Grammar School from 4 September 1951 to 1956. When Sutcliffe's father did return home on leave, he invited his son and art college classmate, Rod Murray (also Sutcliffe's roommate and best friend), for a "real good booze-up", slipping £10 into Sutcliffe's pocket before disappearing for another six months. The Beatles' biographer, Philip Norman, wrote that Charles Sutcliffe was a heavy drinker and physically cruel to his wife, which the young Sutcliffe had witnessed.
During his first year at the Liverpool College of Art, Sutcliffe worked as a bin man on the Liverpool Corporation's waste collection trucks. Lennon was introduced to Sutcliffe by Bill Harry, a mutual friend, when all three were studying at the Liverpool College of Art. According to Lennon, Sutcliffe had a "marvellous art portfolio" and was a very talented painter who was one of the "stars" of the school. He helped Lennon to improve his artistic skills, and with others, worked with him when Lennon had to submit work for exams. Sutcliffe shared a flat with Murray at 9 Percy Street, Liverpool, before being evicted and moving to Hillary Mansions at 3 Gambier Terrace, where another art student lived, Margaret Chapman, who competed with Sutcliffe to be the best painter in class. The flat was opposite the new Anglican cathedral in the rundown area of Liverpool 8, with bare lightbulbs and a mattress on the floor in the corner. Lennon moved in with Sutcliffe in early 1960. (Paul McCartney later admitted that he was jealous of Sutcliffe's relationship with Lennon, as he had to take a "back seat" to Sutcliffe). Sutcliffe and his flatmates painted the rooms yellow and black, which their landlady did not appreciate. On another occasion the tenants, needing to keep warm, burned the flat's furniture.
After talking to Sutcliffe one night at the Casbah Coffee Club (owned by Pete Best's mother, Mona Best), Lennon and McCartney persuaded Sutcliffe to buy a Höfner President 500/5 model bass guitar on hire-purchase from Frank Hessey's Music Shop. Sutcliffe was versed in music: he had sung in the local church choir in Huyton, his mother had insisted on piano lessons for him since the age of nine, he had played bugle in the Air Training Corps, and his father had taught him some chords on the guitar. In May 1960, Sutcliffe joined Lennon, McCartney, and George Harrison (then known as "the Silver Beatles"). Sutcliffe's fingers would often blister during long rehearsals, as he had never practised long enough for his fingers to become calloused, even though he had previously played acoustic guitar. Sutcliffe started acting as a booking agent for the group, and they often used his Gambier Terrace flat as a rehearsal room.
In July 1960, the Sunday newspaper, The People, ran an article entitled "The Beatnik Horror" that featured a photograph taken in the flat below Sutcliffe's of a teenaged Lennon lying on the floor, with Sutcliffe standing by a window. As they had often visited the Jacaranda club, its owner, Allan Williams, arranged for the photograph to be taken, subsequently taking over from Sutcliffe to book concerts for the group: Lennon, McCartney, Harrison and Sutcliffe. The Beatles' subsequent name change came during an afternoon in the Renshaw Hall bar when Sutcliffe, Lennon and his girlfriend, Cynthia Powell, thought up names similar to Holly's band, the Crickets, and came up with Beetles. Lennon later changed the name because he thought it sounded French, suggesting Le Beat or Beat-less.