Lajpat Rai was born on 28 January 1865 in a Hindu Aggarwal family,as a son of Urdu and Persian government school teacher Satta Matka Radha Krishan Agrawal and his wife Gulab Devi Agrawal, in Dhudike (now in Moga district, Punjab).In 1877, he was married to Radha Devi Agrawal, with whom had two sons, Amrit Rai Agrawal and Pyarelal Agrawal, and a daughter, Parvati Agrawal.

In the late 1870s, his father was Satta Matka Matka to Rewari, where he had his initial education in Government Higher Secondary School, Rewari, Punjab province (now in Haryana, India), where his father was posted as an Urdu teacher. During his early life, Rai's liberal views and belief in Hinduism were shaped by his father and deeply religious mother respectively, which he successfully applied to create a career of reforming the religion and Indian policy through politics and journalistic writing. In 1880, Satta Matka result Rai joined Government College at Lahore to study Law, where he came in contact with patriots and future freedom fighters, such as Lala Hans Raj and Pandit Guru Dutt. While studying at Lahore he was influenced by the Hindu reformist movement of Swami Dayanand Saraswati, became a member of existing Arya Samaj Lahore (founded 1877) and founder editor of Lahore-based Arya Gazette.When studying law, he became a firm believer in the idea that Hinduism, above nationality, was the pivotal point upon which an Indian lifestyle must be based. He believed, Hinduism, led to practices of peace to humanity, and the idea that when nationalist ideas were added to this peaceful belief system, a secular nation could be formed. His involvement with Matka Satta Mahasabha leaders gathered criticism from the Naujawan Bharat Sabha as the Mahasabhas were non-secular, which did not conform with the system laid out by the Indian National Congress. This focus on Hindu practices in the subcontinent would ultimately lead him to the continuation of peaceful movements to create successful demonstrations for Indian independence.