Palmer was born to Doris (Morrison) and Milfred Jerome "Deacon" Palmer (1905-1976) in Latrobe, Pennsylvania, a working-class steel mill town. He learned golf from his father, who had suffered from polio at a young age and was head professional and greenskeeper at Latrobe Country Club, which allowed young Arnold to accompany his father as he maintained the course. Palmer attended Wake Forest College on a golf scholarship. He left upon the death of close friend Bud Worsham (1929-1950) and enlisted in the U.S. Coast Guard, where he served for three years, 1951-1954.

Palmer was married to the former Winnie Walzer (1934-1999) for 45 years; the couple had two daughters. She died at age 65 on November 20, 1999, from complications due to ovarian cancer. His grandson, Sam Saunders, is a professional golfer who grew up playing at Bay Hill, where he won the club championship at age 15. He attended Clemson University in South Carolina on a golf scholarship and turned pro in 2008. Saunders stated that Palmer's family nickname is "Dumpy". He married his second wife, Kathleen Gawthrop, in 2005 in Hawaii.  During the spring and summer months, Palmer resided in Latrobe, and he spent winters in Orlando and La Quinta, California. He first visited Orlando in 1948 during a college match. When he took up residence in Orlando, Palmer helped the city become a recreation destination, "turning the entire state of Florida into a golfing paradise". That included building one of the premier events on the PGA Tour there along with his contributing to new hospitals. On hearing about Palmer's death, Tiger Woods said, "My kids were born at the Winnie Palmer Hospital for Women & Babies, and his philanthropic work will be remembered along with his accomplishments in golf." Arnold Palmer Boulevard is named in his honor.  Palmer had supported Scottish football club Rangers F.C. since his boyhood. He was a member of the Freemasons since 1958. Palmer created the Arnie's Army Charitable Foundation to help children and youth. The Foundation saw the creation of the Winnie Palmer Hospital for Women & Babies Center, The Howard Philips Center for Children & Families, the Arnold Palmer Hospital for Children, and the Winnie Palmer Nature Reserve. He was also a spokesman for Hertz Rent-a-Car with O. J. Simpson.  During his playing career, Arnold Palmer smoked cigarettes, which caused him to battle an addiction to nicotine. He noted that many of his colleagues smoked, and he even endorsed the product in television commercials. Later in life, Palmer made a complete about-face and urged the public to give up smoking. He said that cigarette smoking has a negative effect on every organ in the body.

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