Florence Margaret Smith was bron on September 20, 1902 in Kingston upon Hull, England, the second daughter of Ethel and Charles Smith. She was called "Peggy" within her family, but acquired the name "Stevie" as a young woman. Her father was a shipping agent, a business that he had inherited from his father. As the company and his marriage began to fall apart, he ran away to sea and Smith saw very little of him after that.
When Stevie Smith was three years old, she moved with her mother and sister to Palmers Green in North London where she would live until her death in 1971. She resented the fact that her father had abandoned his family. Later, when her mother became ill, her aunt Madge Spear came to live with them, raised Smith and her elder sister Molly and became the most important person in Smith's life.
When Smith was five, she developed tubercular peritonitis and was sent to a sanatorium near Broadstairs, Kent, where she remained for three years. Her mother died when Smith was 16.