Steinfeld was born on December 11, 1996, in the Tarzana neighborhood of Los Angeles, California, the younger of two children of Cheri (née Domasin), an interior designer, and Peter Steinfeld, a personal trainer. She has an older brother, Griffin. Her paternal uncle is fitness trainer and actor Jake Steinfeld, and her maternal great uncle is former child actor Larry Domasin. Her maternal first cousin, actress True O'Brien, appeared in a television commercial when Steinfeld was eight years old, inspiring her to try acting as well.
Steinfeld's father is Jewish and her mother is Christian and part Filipino, and she has said that she "celebrate[s] it all." Her maternal grandfather, Ricardo Domasin, was of half Filipino (from Panglao, Bohol) and half African-American descent. Steinfeld was raised in Agoura Hills and later in Thousand Oaks, California, attending Ascension Lutheran School, Conejo Elementary, and Colina Middle School. She was home-schooled from 2008 until her high school graduation in June 2015.