Phylicia Rashad was born in Houston, Texas to African-American parents Vivian Elizabeth (Ayers), a poet and art director, and Andrew Arthur Allen, an orthodontist. As a child, Phylicia, her older brother Andrew (called Tex), and younger sister, dancer and actress Debbie Allen, lived in Mexico. She has another brother, Hugh Allen (a real-estate banker in North Carolina). Their mother decided to live in Mexico to give the Allen children a brief experience of not having to endure the chronic racism and segregation that was typical of Texas during the 1950s. Phylicia and Debbie are fluent in Spanish. Phylicia graduated from Howard University and later taught drama there.

With younger sister Debbie Allen, she has a production company, D.A.D., which stood for Doctor Allen's Daughters. Her Pulitzer-nominated mother is the artistic and free spirit that has influenced and encouraged the remarkable creativity that so marks Rashad as a performer.