Newman was born on January 26, 1925, in Shaker Heights, Ohio. He was the second son of Theresa Garth and Arthur Sigmund Newman (died 1961), who ran a sporting goods store.
Paul's father was Jewish, the son of Simon Newman and Hannah Cohn, emigrants from Hungary and Poland. His mother, Theresa, whose year of birth remains unclear but appears to have been between 1889 and 1895, was a practitioner of Christian Science. She was born to a Slovak Roman Catholic family in Peticse (near Homonna) in the Austro-Hungarian Empire (present-day Ptičie near Humenné, Slovakia). Newman's mother worked in his father's store, while raising Paul and his elder brother, Arthur, who later became a producer and production manager.