Levy was born to a Jewish family in downtown Hamilton, Ontario. His mother, Rebecca (née Kudlatz; 1910-1988), was a homemaker, and his father, Joseph (1909-1985), was a foreman at an automobile plant. He has a brother, Fred, and sister, Barbara. His mother was born in Glasgow, Scotland, to Polish Jewish parents, later moving to Canada. His father was Sephardi Jewish, with ancestors from Spain and Bulgaria.
Levy attended Westdale Secondary School, where he was student council president. He subsequently attended McMaster University. He was vice-president of the McMaster Film Board, a student film group, where he met filmmaker Ivan Reitman.
