Allen was born in New York City to a Jewish family of Austrian and Russian ancestry. His parents, Martin Königsberg (born on December 25, 1900 in New York; died on January 13, 2001) and Netty Cherrie (born in 1908 in New York; died in January 2002), and his sister, Letty (born 1943), lived in Flatbush, Brooklyn. He attended Hebrew school for eight years, and then went to Public School 99 and to Midwood High School. During that time, he lived in part on Avenue K, between East 14th and 15th Streets. Nicknamed "Red" because of his red hair, he impressed students with his extraordinary talent at card and magic tricks.

To raise money he began writing gags for the agent David O. Alber, who sold them to newspaper columnists. Reportedly, Allen's first published joke was "I am at two with Nature."

At sixteen, he started writing for stars like Sid Caesar and began calling himself Woody Allen. He was a gifted comedian from an early age and would later joke that when he was young he was often sent to inter-faith summer camps, where he "was savagely beaten by children of all races and creeds."

After high school, he went to New York University where he studied communication and film, but, never much of a student, he soon dropped out due to poor grades. He later briefly attended City College of New York.