Trejo was born on May 16, 1944, on Temple Street in the Echo Park neighborhood of Los Angeles, California, to Mexican-American parents. He is the son of Delores Rivera King and Dionisio "Dan" Trejo (1922–1981), a construction worker. Trejo was the result of an extramarital affair; Delores's husband was away fighting in World War II.

Trejo was often abused by his father. By 1949, Trejo shared a room with his cousins at their grandmother's house. His stepmother was Alice Mendias, "his only source of comfort" when he lived with his father.

Trejo was using marijuana, heroin, and cocaine by ages 8, 12, and 18, respectively. Trejo's uncle Gilbert introduced him to all three and was responsible for Trejo overdosing on his first heroin fix. When he was 13, he moved to the diverse neighborhood of Pacoima, Los Angeles, where he said he did not experience racism growing up.

At age seven, Trejo participated in his first drug deal. He was first arrested at the age of 10, but experienced his first incarceration at Eastlake Juvenile Hall in 1956.

Throughout the 1960s, Trejo's life consisted predominantly of intermittent jail stints in the California prison system. His final term in custody is said to have ended in 1972. However, Trejo did time in various juvenile offenders' camps, including three years at Camp Glenn Rockey, San Dimas, for maiming a sailor (stabbing him in the face with broken glass), followed by numerous California prisons between 1959 and 1969; "I was in San Quentin, Folsom, Soledad, Vacaville, Susanville, Sierra".

Trejo arrived at San Quentin State Prison in 1966, and his heroin use was exacerbated shortly thereafter. He was a debt collector and drug dealer, often participating in or witnessing acts of serious violence, including murder. Simultaneously while imprisoned, Trejo focused on boxing and became a champion in San Quentin's lightweight and welterweight divisions

In July 1969, Trejo was released from custody for the final time and returned to Pacoima, Los Angeles, having served five years of a 10-year prison sentence.

Actor Danny Trejo is known for having one of the most famous tattoos in the world. When Danny revealed it to his co-star Salma Hayek, she was shocked to learn the truth behind its uncanny resemblance to her face. Danny was known as one of the most feared and dangerous actors in Hollywood, but Salma was able to learn the truth and see past the dark history that was Danny's past.