He was born John Herbert Dillinger on June 22, 1903, in Indianapolis, Indiana. Dillinger was the youngest of two children born to John Wilson Dillinger and Mary Ellen "Molly" Lancaster. The elder Dillinger was a somber, church-going small businessman who owned a neighborhood grocery store and some rental houses. He was simultaneously a harsh disciplinarian who would beat Johnnie for his insubordination, and then turn around and give him money for candy. Later, when Johnnie was in his teens, Dillinger, Sr. would alternate between locking Johnnie in the house all day and then, later in the week, letting him roam the neighborhood for most of the night.

As a boy, John Dillinger was constantly getting into trouble. He would commit small time pranks and petty theft with his neighborhood gang, "the Dirty Dozen." Most of his neighbors would later say he was generally a cheerful, likable kid who didn't get in to any more mischief than other boys. But there were also accounts of severe juvenile delinquency and malicious behavior as a teenager. To a degree, both of these perceptions are correct and were evident in his adult life. Like any celebrity, accounts describing his early life were shadowed by his later exploits and added either positively or negatively to his reputation.

Johnnie Dillinger's mother, Molly, died of a stroke when he was not quite yet four years old. His sister, Audrey, who was 15 years his senior raised him until his father remarried in 1912. Dillinger quit school at age 16, not due to any trouble, but because he was bored and wanted to make money on his own. He was said to be good employee with a talent for working with his hands. His father, however, wasn't pleased with his career choice and tried to talk him out of it. John showed his obstinacy and refused to go back to school. In 1920, hoping a change of venue would provide a more wholesome influence on his son, John Dillinger, Sr. sold his grocery store and property to retire to a farm in Mooresville, Indiana. Ever defiant, John, Jr. kept his job at the Indianapolis machine shop and commuted the 18 miles on his motorcycle. His wild and rebellious behavior continued with nightly escapades which included, drinking, fighting, and visiting prostitutes.

Matters reached a head on July 21, 1923, when young John Dillinger stole a car to impress a girl on a date. He was later found by a police officer roaming aimlessly through Indianapolis streets. The policeman pulled him over to question him and, suspicious of his vague explanations, placed him under arrest. Dillinger broke loose and ran. Knowing he couldn't go back home, he joined the United States Navy the next day. He made it through basic training, but the regimented life of military service was not for him. While assigned to the U.S.S. Utahthe same U.S.S. Utah that was sunk at Pearl Harbor in 1941he jumped ship and returned home to Mooresville. His five-month military career was over, and he was eventually dishonorably discharged.

Upon his return to Mooresville in April 1924, John Dillinger met and married 16-year-old Beryl Ethel Hovious and attempted to settle down. With no job or income, the newlyweds moved into Dillinger's father's farm house. Within a few weeks of his wedding, he was arrested for stealing several chickens. Though his father was able to work out a deal to keep the case out of court, it did little to help his relationship with his father. Dillinger and Beryl moved out of their cramped bedroom and into Beryl's parents' home in Martinsville, Indiana. There he got a job in an upholstery shop.

During the summer of 1924, John Dillinger played shortstop on the Martinsville baseball team. There he met and befriended Edgar Singleton, a heavy drinking individual who was a distant relative of Dillinger's stepmother. Singleton became Dillinger's first partner in crime.