Loren was born Sofia Villani Scicolone on September 20, 1934, in the Clinica Regina Margherita in Rome, Italy. She was the daughter of Romilda Villani (1910–1991) and Riccardo Scicolone, a construction engineer of noble descent (Loren wrote in her autobiography that she is entitled to call herself the Marquess of Licata Scicolone Murillo).
An illegitimate child born out of wedlock, her father Riccardo Scicolone refused to marry Villani, leaving the piano teacher and aspiring actress without financial support. Loren met with her father three times, at age five, age seventeen and in 1976 at his deathbed, citing that she forgave him, but never forgotten the abandonment of her mother. Loren's parents had another child together, her sister Maria, in 1938. Loren has two younger paternal half-brothers, Giuliano and Giuseppe. Romilda, Sofia, and Maria lived with Loren's grandmother in Pozzuoli, near Naples. Her mother's unmarried status lead to a life of poverty. Sofia was so undernourished as a child she was called Sofia Stuzzicadente or "Sofia the toothpick." By all accounts she was a thin, shy, fearful and unattractive girl.
During the Second World War, the harbour and munitions plant in Pozzuoli was a frequent bombing target of the Allies. During one raid, as Loren ran to the shelter, she was struck by shrapnel and wounded in the chin. After that, the family moved to Naples, where they were taken in by distant relatives. After the war, Loren and her family returned to Pozzuoli. Loren's grandmother Luisa opened a pub in their living room, selling homemade cherry liquor. Romilda Villani played the piano, Maria sang, and Loren waited on tables and washed dishes. The place was popular with the American GIs stationed nearby.