Ellis was born in Los Angeles in 1964. He was raised in the neighborhood of Sherman Oaks, located in the San Fernando Valley. His father, Robert Martin Ellis, was a property developer, and his mother, Dale Ellis (née Dennis), was a homemaker. They divorced in 1982. During the release of his third novel, American Psycho, Ellis said that his father was abusive and was the basis of the book's best-known character, Patrick Bateman. Later Ellis said the character was not in fact based on his father, but on Ellis himself, saying that all of his work came from a specific place of pain he was going through in his life during the writing of each of his books. Ellis says that while his family life growing up was somewhat difficult due to the divorce, he mostly had an "idyllic" California childhood.
Ellis graduated from the Buckley School in Sherman Oaks. He then attended Bennington College in Bennington, Vermont, where he studied music and then gradually gravitated to writing, which had been one of his passions since childhood. Ellis was in a band called "Line One" with John Shanks.
At Bennington College, Ellis met and befriended Donna Tartt and Jonathan Lethem, who both later became published writers. It was here he completed his first novel, Less than Zero, which was published while Ellis was 21 and still a student.