Kejriwal was born in Siwani, Bhiwani district, Haryana on 16 August 1968, the first of the three children of Gobind Ram Kejriwal and Gita Devii. His father was an electrical engineer who graduated from the Birla Institute of Technology, Mesra, and whose work led to many changes in the family's residence. Kejriwal spent most of his childhood in north Indian towns such as Sonepat, Ghaziabad and Hisar. He was educated at Campus School in Hisar.
Kejriwal graduated from the Indian Institute of Technology in Kharagpur, majoring in mechanical engineering. He joined Tata Steel in 1989 and was posted in Jamshedpur. Kejriwal resigned in 1992, having taken leave of absence in order to study for the Civil Services Examination. Kejriwal spent some time in Kolkata, at the Ramakrishna Mission in North-East India and at Nehru Yuva Kendra.
Kejriwal joined the IRS in 1995 after qualifying through the Civil Services Examination. In 2000, he was granted two years' paid leave to pursue higher education on condition that upon resuming his work he would not resign from the Service for at least three years. Failure to abide by that condition would require him to repay the salary given during the leave period. He rejoined in 2003 and worked for 18 months before taking unpaid leave for 18 months. In February 2006, he resigned from his position as a Joint Commissioner of Income Tax in New Delhi. The Government of India claimed that Kejriwal had violated his original agreement by not working for three years. Kejriwal said that his 18 months of work and 18 months of unpaid absence amounted to the stipulated three year period during which he could not resign and that this was an attempt to malign him due to his involvement with Team Anna, a strand of the Indian anti-corruption movement. The dispute ran for several year until, in 2011, it was resolved when he paid his way out of the Service with the help of loans from friends.