Tilly's father, Harry Chan, a car salesman, was of Chinese descent. Her mother, Patricia Ann Tilly, a Canadian teacher and actress, had Irish, Finnish, and possibly First Nations, ancestry.
Jennifer Tilly was born on September 16, 1958, in Los Angeles, California, the United States, to Harry Chan, a used car salesman, and Patricia (née Tilly), a Canadian schoolteacher and former stage actress. The second of the four children in her family, Jennifer was hugely inspired by her mother and often accompanied her to her theater performances. As her family spent what little money they had on the ballet, theater and movies, Tilly grew to love and respect the acting art. Her sister is actress Meg Tilly.
Jennifer’s parents separated when she was 5 years old. Her mother took all the four children with her to Canada where Jennifer spent most of her childhood. She raised on rural Texada Island, British Columbia, by her mother and stepfather, John Ward.