Sir Kenneth Arthur Dodd was born on 8 November 1927 in a former farmhouse in Knotty Ash, a suburb of Liverpool, to Arthur Dodd and Sarah (née Gray); where his parents lived. He had an older brother, William and a younger sister, June.

He went to the Knotty Ash School and sang in the local church choir of St John's Church, Knotty Ash. He was to live in Knotty Ash all his life, dying in the house in which he was born, and often referred to the area—as well as its mythical "jam butty mines" and "black pudding plantations"—in his act. He then attended Holt High School, a grammar school in Childwall, Liverpool, but left at the age of 14 to work for his father, a coal merchant.