Michael Polanyi was born on March 11, 1891, in Budapest, Hungary, the fifth child of Michael Pollacsek and Cecilia Wohl. His family life was marked by a rich and stimulating intellectual world that combined theoretical and practical concerns and artistic, literary, and social issues. His father was a civil engineer, and his mother was the center of a circle of poets, painters, and scholars.
The family moved to Budapest and Magyarized their surname to Polányi. His father built much of the Hungarian railway system, but lost most of his fortune in 1899 when bad weather caused a railway building project to go over budget.
He died in 1905. Cecília Polányi established a salon that was well known among Budapest's intellectuals, and which continued until her death in 1939. His older brother was Karl Polanyi, the political economist and anthropologist, and his niece was Eva Zeisel, a world-renowned ceramist.