Born in eastern Ohio in Martins Ferry, just north and across the Ohio River from Wheeling, West Virginia, Groza's parents were immigrants from Transylvania, part of modern-day Romania. His Hungarian mother Mary and Romanian father John (Ioan) Groza owned and ran Groza's Tavern on Main Street. Lou was the smallest in stature of four boys in an athletic family; his brother Alex became a star basketball player at the University of Kentucky, a member of two national championship teams.

Groza graduated from high school in 1942 and enrolled on an athletic scholarship at Ohio State University in Columbus, where he played as a tackle and placekicker on the Buckeyes' freshman team. Groza played in three games and kicked five field goals, including one from 45 yards (41 m) away. In 1943, he enlisted in the U.S. Army as World War II intensified. He first went for basic training to Abilene, Texas, and then to Brooks General Hospital in San Antonio.  After a stint with the short-lived Army Service Training Program, Groza was sent with the 96th Infantry Division to serve as a surgical technician in Leyte, Okinawa, and other places in the Pacific theater in 1945. The day he landed in the Philippines, Groza saw a soldier shot in the face. He was stationed in a bank of tents about five miles from the front lines and helped doctors tend to the wounded. "I saw a lot of men wounded with severe injuries", he later said. "Lose legs, guts hanging out, stuff like that. It's a tough thing, but you get hardened to it, and you accept it as part of your being there."  While he was in the Army, he received a package from Paul Brown, the Ohio State football coach. It contained footballs and a contract for him to sign to play on a team Brown was coaching in the new All-America Football Conference (AAFC). He signed the contract in May 1945 and agreed to join the team, called the Cleveland Browns, after the war ended in 1946. Groza got $500 a month stipend until the end of the war and a $7,500 annual salary.

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