A fifth-generation Texan, Perry was born on March 4, 1950, in Haskell, Texas, and raised in Paint Creek, Texas, the son of dryland cotton farmers Joseph Ray Perry (1925–2017) and Amelia June Holt Perry (born 1929). He has one older sister. Perry's ancestry is almost entirely English, dating as far back as the original Thirteen Colonies. His family has been in Texas since before the Texas Revolution.

His father, a Democrat, was a long-time Haskell County commissioner and school board member. Perry has said that his interest in politics probably began in November 1961, when his father took him to the funeral of U.S. Representative Sam Rayburn.

Perry was in the Boy Scouts of America (BSA) and earned the rank of Eagle Scout. The BSA has honored Perry with the Distinguished Eagle Scout Award.

Perry attended Texas A&M University where he was a member of the Corps of Cadets and the Alpha Gamma Rho fraternity. He was elected senior class social secretary, a member and redpot in Aggie Bonfire, and one of A&M's five "yell leaders". He graduated in 1972 with a Bachelor of Science degree in animal science.

In 1989, he said, "I was probably a bit of a free spirit, not particularly structured real well for life outside of a military regime, I would have not lasted at Texas Tech or the University of Texas. I would have hit the fraternity scene and lasted about one semester."

In the early 1970s, Perry interned during several summers with Southwestern Advantage, as a door-to-door book salesman. "I count my time working for Dortch Oldham (then president of the Southwestern family of companies) as one of the most important formative experiences of my life", Perry said in 2010. "There is nothing that tests your commitment to a goal like getting a few doors closed in your face." He said that "Mr. Oldham taught legions of young people to communicate quickly, clearly and with passion, a lesson that has served me well in my life since then."

In 1984, Perry was elected to the Texas House of Representatives as a Democrat from district 64, which included his home county of Haskell. He served on the House Appropriations and Calendars committees during his three two-year terms in office. He befriended fellow freshman state representative Lena Guerrero, a staunch liberal Democrat who endorsed Perry's reelection bid in 2006.

Perry was part of the "Pit Bulls", a group of Appropriations members who sat on the lower dais in the committee room ("the pit") who pushed for austere state budgets during the 1980s. At one point, The Dallas Morning News named him one of the ten most effective members of the legislature.

In 1990, as a newly minted Republican, Perry challenged Jim Hightower, the incumbent Democratic Agriculture Commissioner. Karl Rove was Perry's campaign manager.

In the Republican primary on March 13, 1990, Perry polled 276,558 votes (47%), with Richard McIver garnering 176,976 votes (30%) and Gene L. Duke, who placed third, polling 132,497 votes (23%). Since Perry fell shy of the necessary 50% to win outright, a runoff was held between Perry and McIver set on April 10, 1990. In the runoff, he emerged victorious, garnering 96,649 votes (69%) to McIver's 43,921 votes (31%).

In 1998, Perry ran for lieutenant governor. During this election, Perry had a notable falling out with his previous top political strategist Karl Rove, which began the much-reported rivalry between the Bush and Perry camps. Perry polled 1,858,837 votes (50.04 percent) to the 1,790,106 (48.19 percent) cast for Democrat John Sharp. Perry became the state's first Republican lieutenant governor since Reconstruction, taking office on January 19, 1999.

Perry assumed the office of governor on December 21, 2000, following the resignation of George W. Bush—who was preparing to become President of the United States. He won the office in his own right in the 2002 gubernatorial election, where he received 58% of votes to Laredo oilman and businessman Tony Sanchez's 40%. He was re-elected in the 2006 gubernatorial election against three major opponents, polling 39% of votes against runner-up former U.S. Congressman Chris Bell of Houston with 30%. Former Republican Comptroller, Carole Keeton Strayhorn, running as an independent, garnered 18% of the vote and comic/author/musician, Kinky Friedman, also running as an independent, garnered over 12%. In the 2010 gubernatorial election, Perry became the first Texas governor to be elected to three four-year terms, polling 55% of votes to former Houston Mayor Bill White's 42%.

In the 2001 legislative session, Perry set a record for his use of the veto, rejecting 82 acts, more than any other governor in any single legislative session in the history of the state since Reconstruction.