O'Connor was born on March 25, 1925, in Savannah, Georgia, the only child of Edward Francis O'Connor, a real estate agent, and Regina Cline. As an adult, she remembered herself as a "pigeon-toed child with a receding chin and a you-leave-me-alone-or-I'll-bite-you complex."
O'Connor and her family moved to Milledgeville, Georgia, in 1940 to live on Andalusia Farm, which is now a museum dedicated to O'Connor's work. In 1937, her father was diagnosed with systemic lupus erythematosus; it led to his eventual death on February 1, 1941, and O'Connor and her mother continued to live in Milledgeville.
O'Connor attended Peabody High School, where she worked as the school newspaper's art editor and from which she graduated in 1942. She entered Georgia State College for Women (now Georgia College & State University) in an accelerated three-year program and graduated in June 1945 with a social sciences degree. While at Georgia College, she produced a significant amount of cartoon work for the student newspaper.
In 1946, she was accepted into the prestigious Iowa Writers' Workshop at the University of Iowa, where she first went to study journalism. While there, she got to know several important writers and critics who lectured or taught in the program, among them Robert Penn Warren, John Crowe Ransom, Robie Macauley, Austin Warren and Andrew Lytle. Lytle, for many years editor of the Sewanee Review, was one of the earliest admirers of her fiction. He later published several of her stories in the Sewanee Review, as well as critical essays on her work. Workshop director Paul Engle was the first to read and comment on the initial drafts of what would become Wise Blood. She received an M.A. from the University of Iowa in 1947. During the summer of 1948, O'Connor continued to work on Wise Blood at Yaddo, an artists' community in Saratoga Springs, New York, where she also completed several short stories.
In 1949, O'Connor met and eventually accepted an invitation to stay with Robert Fitzgerald (a well-known translator of the classics) and his wife, Sally, in Ridgefield, Connecticut.