Obama was born on August 4, 1961 in Honolulu, Hawaii to Barack Obama, Sr. (born in Nyanza Province, Kenya, of Luo ethnicity) and Ann Dunham (born in Wichita, Kansas). His parents met while both were attending the University of Hawaii at Manoa, where his father was enrolled as a foreign student. Obama's parents separated when he was two years old and later divorced. His father went to Harvard University to pursue Ph.D. studies, then returned to Kenya. His mother married Lolo Soetoro, an Indonesian foreign student, and the family moved to Jakarta in 1967. Obama attended local schools in Jakarta, including Basuki school, from ages 6 to 10, where classes were taught in the Indonesian language. He then returned to Honolulu to live with his maternal grandparents while attending Punahou School from the fifth grade until his graduation in 1979. Obama's mother died of ovarian cancer a few months after the publication of his 1995 memoir, Dreams from My Father.

In the memoir, Obama describes his experiences growing up in his mother's American middle class family. His knowledge about his African father, who returned once for a brief visit in 1971, came mainly through family stories and photographs. Of his early childhood, Obama writes: "That my father looked nothing like the people around me—that he was black as pitch, my mother white as milk—barely registered in my mind." The book describes his struggles as a young adult to reconcile social perceptions of his multiracial heritage. He wrote that he used alcohol, marijuana, and cocaine during his teenage years to "push questions of who I was out of my mind".

After high school, Obama moved to Los Angeles, where he studied at Occidental College for two years. He then transferred to Columbia University in New York City, where he majored in political science with a specialization in international relations. Obama received his B.A. degree in 1983, then worked at Business International Corporation and NYPIRG before moving to Chicago to take a job as a community organizer. As Director of the Developing Communities Project, he worked with low-income residents in Chicago's Roseland community and the Altgeld Gardens public housing development. He entered Harvard Law School in 1988. In 1990, The New York Times reported his election as the Harvard Law Review's "first black president in its 104-year history". He completed his J.D. degree magna cum laude in 1991. On returning to Chicago, Obama directed a voter registration drive. As an associate attorney with Miner, Barnhill & Galland from 1993 to 1996, he represented community organizers, discrimination claims, and voting rights cases. He was a lecturer of constitutional law at the University of Chicago Law School from 1993 until his election to the U.S. Senate in 2004.

Obama was elected to the Illinois State Senate in 1996 from the state's 13th District in the south-side Chicago neighborhood of Hyde Park. In 2000, he made an unsuccessful Democratic primary run for the U.S. House of Representatives seat held by four-term incumbent candidate Bobby Rush. He was reelected to the Illinois Senate in 1998 and 2002, officially resigning in November 2004 following his election to the U.S. Senate. As a state legislator, Obama gained bipartisan support for legislation reforming ethics and health care laws. He sponsored a law enhancing tax credits for low-income workers, negotiated welfare reform, and promoted increased subsidies for child care. Obama also led the passage of legislation mandating videotaping of homicide interrogations, and a law to monitor racial profiling by requiring police to record the race of drivers they stopped. During his 2004 general election campaign for U.S. Senate, he won the endorsement of the Illinois Fraternal Order of Police, whose president credited Obama for his active engagement with police organizations in enacting death penalty reforms. He was criticized by rival pro-choice candidates in the Democratic primary and by his Republican pro-life opponent in the general election for a series of "present" or "no" votes on late-term abortion and parental notification issues.

In 2003, Obama began his run for the U.S. Senate open seat vacated by Peter Fitzgerald. In early opinion polls leading up to the Democratic primary, Obama trailed multimillionaire businessman Blair Hull and Illinois Comptroller Dan Hynes. However, Hull's popularity declined following allegations of domestic abuse. Obama's candidacy was boosted by an advertising campaign featuring images of the late Chicago Mayor Harold Washington and the late U.S. Senator Paul Simon; the support of Simon's daughter; and political endorsements by the Chicago Tribune and Chicago Sun-Times. Obama received over 52% of the vote in the March 2004 primary, emerging 29% ahead of his nearest Democratic rival. His opponent in the general election was expected to be Republican primary winner Jack Ryan. However, Ryan withdrew from the race in June 2004, following public disclosure of child custody divorce records containing sexual allegations by Ryan's ex-wife, actress Jeri Ryan. In August 2004, with less than three months to go before election day, Alan Keyes accepted the Illinois Republican Party's nomination to replace Ryan. A long-time resident of Maryland, Keyes established legal residency in Illinois with the nomination. Through three televised debates, Obama and Keyes expressed opposing views on stem cell research, abortion, gun control, school vouchers, and tax cuts. In the November 2004 general election, Obama received 70% of the vote to Keyes's 27%, the largest electoral victory in Illinois history.

In February 2007, standing before the Old State Capitol building in Springfield, Illinois, Obama announced his candidacy for the 2008 U.S. presidential election. Describing his working life in Illinois, and symbolically linking his presidential campaign to Abraham Lincoln's 1858 House Divided speech, Obama said: "That is why, in the shadow of the Old State Capitol, where Lincoln once called on a house divided to stand together, where common hopes and common dreams still live, I stand before you today to announce my candidacy for President of the United States of America." Speaking at a Democratic National Committee meeting one week before the February announcement, Obama called for putting an end to negative campaigning. "This can't be about who digs up more skeletons on who, who makes the fewest slip-ups on the campaign trail," he said. "We owe it to the American people to do more than that."

Obama's campaign raised US$58 million during the first half of 2007, topping all other candidates and exceeding previous records for the first six months of any year before an election year. Small donors, those contributing in increments of less than $200, accounted for $16.4 million of Obama's record-breaking total, more than for any other Democratic candidate. His campaign reported adding 108,000 new donors through third quarter fundraising, for a total of 365,000 individual contributors in the first nine months. Amid concerns for his safety as the first black candidate seen as having a viable chance of being elected president, the U.S. government assigned Secret Service protection to Obama 18 months before the general election.

With two months remaining before the Iowa Democratic caucuses and New Hampshire Democratic primary, 2008, and national opinion polls showing him trailing Hillary Clinton, Obama began directly charging his top rival with failing to clearly state her political positions. Campaigning in Iowa, he told the Washington Post that as the Democratic nominee he would draw more support than Clinton from independent and Republican voters in the general election. At Iowa's Jefferson-Jackson fundraising dinner in November 2007, he expanded the theme, saying that his presidency would "bring the country together in a new majority" to seek solutions to long-standing problems. In January 2008, Obama won the Iowa caucus with 37.58% support, ahead of 29.75% for John Edwards and 29.47% for Clinton. His Iowa lead was boosted by majority support from a record turnout of voters under 30 years old, most of them first-time caucus goers. Five days later, Clinton won the New Hampshire primary by 39% of the votes to Obama's 37%.

Obama has written two bestselling books. The first, Dreams from My Father: A Story of Race and Inheritance, was published after his graduation from law school and before running for public office. In it he recalls his childhood in Honolulu and Jakarta, college years in Los Angeles and New York City, and his employment as a community organizer in Chicago in the 1980s. The book's last chapters describe his first visit to Kenya, a journey to connect with his Luo family and heritage. In his preface to the 2004 revised edition, Obama explains that he had hoped the story of his family "might speak in some way to the fissures of race that have characterized the American experience, as well as the fluid state of identity—the leaps through time, the collision of cultures—that mark our modern life." Time magazine's Joe Klein wrote that the book "may be the best-written memoir ever produced by an American politician." The audiobook edition earned Obama the 2006 Grammy Award for Best Spoken Word Album.

His second book, The Audacity of Hope: Thoughts on Reclaiming the American Dream, was published in October 2006, three weeks before the 2006 midterm election. It was an immediate bestseller and rose to the top of the New York Times Best Seller list by early November 2006. The Chicago Tribune credits the large crowds that gathered at book signings with influencing Obama's decision to run for president. Former presidential candidate Gary Hart describes the book as Obama's "thesis submission" for the U.S. presidency: "It presents a man of relative youth yet maturity, a wise observer of the human condition, a figure who possesses perseverance and writing skills that have flashes of grandeur." Reviewer Michael Tomasky writes that it does not contain "boldly innovative policy prescriptions that will lead the Democrats out of their wilderness," but does show Obama's potential to "construct a new politics that is progressive but grounded in civic traditions that speak to a wider range of Americans." An Italian translation was published in April 2007 with a preface by Walter Veltroni, Mayor of Rome. Spanish and German editions were published in June 2007.