Dustin Lee Hoffman was born on August 8, 1937, in Los Angeles, California, the younger of two sons of Harry Hoffman (1902–1987) and Lillian (née Gold; 1907–1982). His father worked as a prop supervisor (set decorator) at Columbia Pictures before becoming a furniture salesman.
Hoffman was named after stage and silent screen actor Dustin Farnum. He has an elder brother Ronald, who is a lawyer and economist. Hoffman is Jewish, from an Ashkenazi Jewish family of immigrants from Kyiv, Ukraine (then a part of the Russian Empire), and Iași, Romania. The family's surname was spelled Гойхман (Goikhman) in the Russian Empire.
His upbringing was nonreligious, and he has said, "I don't have any memory of celebrating holidays growing up that were Jewish", and that he had "realized" he was Jewish at around the age of 10.
Hoffman graduated from Los Angeles High School in 1955 and enrolled at Santa Monica College with the intention of studying medicine. But he decided to become an actor, and left in the following year to join the Pasadena Playhouse, although when he told his family about his career goal, his Aunt Pearl warned him, "You can't be an actor. You are not good-looking enough." He also studied with Lee Strasberg and has stated that he did not study with either Sanford Meisner or Stella Adler.
Hoffman initially hoped to become a classical pianist, having studied piano during much of his youth and in college. While at Santa Monica College, he also took an acting class, which he assumed would be easy, and "caught the acting bug". He recalls: "I just was not gifted in music. I did not have an ear." Now an aspiring actor, he spent the next 10 years doing odd jobs, being unemployed, and struggling to get any available acting roles, a lifestyle he was later to portray in the comedy film Tootsie. Hoffman composed a song called "Shooting the Breeze", alongside Bette Midler who wrote the words.