Stevens was born in Detroit, Michigan, and lived there until the age of nine, when his family moved to Petoskey, in the northern part of the Lower Peninsula of Michigan. He was raised by his father Rasjid and his stepmother Pat, only occasionally visiting his mother, Carrie, in Oregon after she married her second husband Lowell Brams. His mother is deceased. Brams later became the head of Stevens' record label Asthmatic Kitty. Stevens is of Lithuanian and Greek descent.
Stevens attended the Detroit Waldorf School, Petoskey High School and Interlochen Arts Academy, and graduated from Harbor Light Christian School. He then attended Hope College in Holland, Michigan, where he graduated Phi Beta Kappa, and then earned an MFA from The New School in New York City.
Sufjan is an Arabic name, meaning "comes with a sword". It predates Islam and most famously belonged to Abu Sufyan, a figure from early Islamic history. The name was given to Stevens by the founder of Subud, an inter-faith spiritual community to which his parents belonged when he was born.
A multi-instrumentalist, Stevens is known for his use of the banjo, but also plays guitar, piano, drums, xylophone, and several other instruments, often playing all of these on his albums through the use of multitrack recording. While in school, he studied the oboe and English horn, which he also plays on his albums. Stevens did not learn to play the guitar until his time at Hope College.
Stevens lives in Kensington, Brooklyn, in New York City, where he makes up the Brooklyn staff of Asthmatic Kitty Records. In a 2005 interview, he said he attends an Anglo-Catholic Episcopal Church. His brother Marzuki Stevens is a formerly recognized road runner, who competed in the marathon and other distances.