Margaret Kenyatta was born in the Dagoretti area of the Kenyan capital Nairobi, to Jomo Kenyatta, a political activist who later became Kenya's first president, and his first wife Grace Wahu. She was one of two children born to Kenyatta and Wahu, after elder brother Peter Muigai. Her parents separated when Kenyatta went to live in London in 1929, remaining there until 1947. Kenyatta remarried twice, giving Margaret several younger half brothers and sisters, including the current President of Kenya, Uhuru Kenyatta.
During Margaret's childhood, her father was a popular figure locally and frequently attracted groups of supporters who came to gather at his house. He frequently engaged with these crowds, and involved Margaret too: "I often used to make him play with me and he held me up in front of the people and they all laughed."