Walcott was born and raised in Castries, Saint Lucia, in the West Indies with a twin brother, the future playwright Roderick Walcott, and a sister, Pamela Walcott. His family is of African and European descent, reflecting the complex colonial history of the island which he explores in his poetry. His mother, a teacher, loved the arts and often recited poetry around the house. His father, who painted and wrote poetry, died at age 31 from mastoiditis while his wife was pregnant with the twins Derek and Roderick, who were born after his death. Walcott's family was part of a minority Methodist community, who felt overshadowed by the dominant Catholic culture of the island established during French colonial rule.
As a young man Walcott trained as a painter, mentored by Harold Simmons, whose life as a professional artist provided an inspiring example for him. Walcott greatly admired Cézanne and Giorgione and sought to learn from them. Walcott's painting was later exhibited at the Anita Shapolsky Gallery in New York City, along with the art of other writers, in a 2007 exhibition named "The Writer's Brush: Paintings and Drawing by Writers".
He studied as a writer, becoming “an elated, exuberant poet madly in love with English” and strongly influenced by modernist poets such as T. S. Eliot and Ezra Pound. Walcott had an early sense of a vocation as a writer. In the poem "Midsummer" (1984), he wrote:
Forty years gone, in my island childhood, I felt that the gift of poetry had made me one of the chosen, that all experience was kindling to the fire of the Muse.
At 14, Walcott published his first poem, a Miltonic, religious poem in the newspaper, The Voice of St Lucia. An English Catholic priest condemned the Methodist-inspired poem as blasphemous in a response printed in the newspaper. By 19, Walcott had self-published his two first collections with the aid of his mother, who paid for the printing: 25 Poems (1948) and Epitaph for the Young: XII Cantos (1949). He sold copies to his friends and covered the costs. He later commented,
I went to my mother and said, 'I’d like to publish a book of poems, and I think it’s going to cost me two hundred dollars.' She was just a seamstress and a schoolteacher, and I remember her being very upset because she wanted to do it. Somehow she got it—a lot of money for a woman to have found on her salary. She gave it to me, and I sent off to Trinidad and had the book printed. When the books came back I would sell them to friends. I made the money back.
The influential Bajan poet Frank Collymore critically supported Walcott's early work.
With a scholarship, he studied at the University College of the West Indies in Kingston, Jamaica.