Bettany was born in Shepherd's Bush, London, the son of Anne (née Kettle), a stage singer, theatre teacher, and stage manager, and Thane Bettany, a dancer, actor, and drama teacher. He has an older sister, Sarah, and had a younger brother, Matthew. Bettany was raised Roman Catholic and later became an atheist. While his father taught at the all-girls boarding school Queenswood School in Hertfordshire, the family lived on the campus.
His brother Matthew died after a fall at Queenswood. Soon after, Bettany left home and went to live on his own in London and his parents later divorced. He lived in a small flat and earned money by playing his guitar in the streets as a busker. After two years, he found a new job in a home for the elderly.
On 1 January 2003, Bettany married actress Jennifer Connelly in Scotland; they met while starring together in A Beautiful Mind and began dating in 2002.
He moved to Brooklyn, New York, with Connelly and her son Kai. The couple's own son, Stellan (named after actor Stellan Skarsgård), was born on 5 August 2003. Stellan's godfather is the actor Charlie Condou. Their second child, daughter Agnes Lark, was born on 31 May 2011.