Lombard was born in Fort Wayne, Indiana, on October 6, 1908 at 704 Rockhill Street. Christened with the name Jane Alice Peters, she was the third child and only daughter of Frederick Christian Peters (1875–1935) and Elizabeth Jayne "Bessie" (Knight) Peters (1876–1942). Her two older brothers, to each of whom she was close, both growing up and in adulthood, were Frederick Charles (1902–1979) and John Stuart (1906–1956). Lombard's parents both descended from wealthy families and her early years were lived in comfort, with the biographer Robert Matzen calling it her "silver spoon period". The marriage between her parents was strained, however, and in October 1914, her mother took the children and moved to Los Angeles. Although the couple did not divorce, the separation was permanent. Her father's continued financial support allowed the family to live without worry, if not with the same affluence they had enjoyed in Indiana, and they settled into an apartment near Venice Boulevard in Los Angeles.
In a stroke of good luck straight out of a "picture show," silent film director Allan Dwan spotted Lombard playing baseball in the street with some neighborhood kids. Taken aback by her exuberance, he cast her in the silent film "A Perfect Crime" (1921). The part was small; the movie forgettable, but for the 12-year-old beauty, none of that mattered. Bessie and Lombard resolved together that she would someday become a movie star.