Kapoor was born on 15 February 1947 in Karunakaran Maternity home, Matunga, Bombay, Bombay Presidency, India (now known as Mumbai, Maharashtra) to Punjabi parents. His family moved from Peshawar and Samundri (now in Pakistan) to Bombay, before the partition of India, for acting careers. He belongs to the famous Kapoor family who have been part of the Hindi film industry since the late 1920s. He is the eldest son of actor and filmmaker Raj Kapoor and his wife Krishna Kapoor. He has two brothers, actors Rajiv and late Rishi, and two sisters, Rima and late businesswoman Ritu. He is one of the grandsons of actor and producer Prithviraj Kapoor, and grandnephew of actor Trilok Kapoor. His paternal uncles, Shammi and Shashi Kapoor were both actors. Also, his maternal uncles, Prem Nath, Rajendra Nath and Narendra Nath and were all involved in Hindi cinema. Actors Prem Krishen and Kailash Nath, are his maternal cousins, while actors Aditya, Karan, Sanjana and Kunal are his paternal cousins. Actor Prem Chopra is his uncle-by-marriage (Krishna's sister Uma's husband). Actress-singer Salma Agha is his second cousin. His nephews include actors Ranbir Kapoor and Armaan Jain, and businessman Nikhil Nanda.