Erik Weisz was born in Budapest to a Jewish family. His parents were Rabbi Mayer Samuel Weisz (1829-1892) and Cecilia Steiner (1841-1913). Houdini was one of seven children: Herman M. (1863-1885) who was Houdini's half-brother, by Rabbi Weisz's first marriage; Nathan J. (1870-1927); Gottfried William (1872-1925); Theodore (1876-1945); Leopold D. (1879-1962); and Carrie Gladys (1882-1959), who was left almost blind after a childhood accident. Weisz arrived in the United States on July 3, 1878, on the SS Fresia with his mother (who was pregnant) and his four brothers.

In 1904, the London Daily Mirror newspaper challenged Houdini to escape from special handcuffs that it claimed had taken Nathaniel Hart, a locksmith from Birmingham, five years to make. Houdini accepted the challenge for March 17 during a matinee performance at London's Hippodrome theater. It was reported that 4000 people and more than 100 journalists turned out for the much-hyped event. The escape attempt dragged on for over an hour, during which Houdini emerged from his "ghost house" (a small screen used to conceal the method of his escape) several times. On one occasion he asked if the cuffs could be removed so he could take off his coat. The Mirror representative, Frank Parker, refused, saying Houdini could gain an advantage if he saw how the cuffs were unlocked. Houdini promptly took out a pen-knife and, holding the knife in his teeth, used it to cut his coat from his body. Some 56 minutes later, Houdini's wife appeared on stage and gave him a kiss. Many thought that in her mouth was the key to unlock the special handcuffs. However, it has since been suggested that Bess did not in fact enter the stage at all, and that this theory is unlikely due to the size of the 6-inch key Houdini then went back behind the curtain. After an hour and ten minutes, Houdini emerged free. As he was paraded on the shoulders of the cheering crowd, he broke down and wept. Houdini later said it was the most difficult escape of his career.  After Houdini's death, his friend Martin Beck was quoted in Will Goldston's book, Sensational Tales of Mystery Men, as admitting that Houdini was bested that day and had appealed to his wife, Bess, for help. Goldston goes on to claim that Bess begged the key from the Mirror representative, then slipped it to Houdini in a glass of water. It was stated in the book The Secret Life of Houdini that the key required to open the specially designed Mirror handcuffs was 6 inches long, and could not have been smuggled to Houdini in a glass of water. Goldston offered no proof of his account, and many modern biographers have found evidence (notably in the custom design of the handcuffs) that the Mirror challenge may have been arranged by Houdini and that his long struggle to escape was pure showmanship.  This escape was discussed in depth on the Travel Channel's Mysteries at the Museum in an interview with Houdini expert, magician and escape artist Dorothy Dietrich of Scranton's Houdini Museum.  A full-sized design of the same Mirror Handcuffs, as well as a replica of the Bramah style key for it, is on display to the public at The Houdini Museum in Scranton, Pennsylvania. This set of cuffs is believed to be one of only six in the world, some of which are not on display.

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