Born to Jewish parents, Grauman and his father went to Dawson City, Yukon, for the Gold Rush when he was a young man. He worked there as a paperboy. Since newspapers were scarce, they could command a dollar each. Grauman told a story about a store owner who purchased a newspaper from him for $50. The shopkeeper then read the paper aloud in his store, charging admission to local miners. In the Yukon, the young Grauman learned a lesson which would serve him the rest of his life: that people would willingly pay handsomely for entertainment. Sid and his father began organizing events like boxing matches, which paid them well. It was also in the Yukon that Grauman saw his first motion picture. A failed prospector in the Klondike gold rush, David Grauman initially took his young son to the Klondike with the idea of building a theater there. Though they did not strike gold, both of the Graumans were made considerably wealthy by their Klondike entertainment activities. When his father’s sister became ill and he left the territory to care for her, young Grauman remained in Dawson City for a time. His parents settled in San Francisco and Grauman joined them there in 1900.

Sid Grauman introduced the flickers to San Jose, California. On February 7, 1903, Sid Grauman opened the Unique Theatre at 20 East Santa Clara Street in San Jose. The theatre presented movies, stock theater companies, amateur nights, and vaudeville acts. The most notable amateur to develop his talent there was Roscoe “Fatty” Arbuckle. The 1906 earthquake demolished the Unique Theatre, and Grauman moved on to Los Angeles, founding the Princess Theatre and Grauman’s Chinese Theatre in Hollywood.

David Grauman tried his hand at expanding his theater business in New York City and the East Coast, where he was far from successful; for a time, Sid worked in Scranton, Pennsylvania at one of the theaters he and his father were interested in. David Grauman suffered enough financial loss to have the need to take a business partner in his Lyceum Theater, and to accept an offer from the partner to buy him out in 1905. He later arranged to take over the lease of the Lyceum, which would then evict his former partner from the theater in 1907. By early 1906, the Graumans had lost their lease of the Unique Theater. The building had been purchased by the president of the Orpheum Theater circuit and Grauman’s rent was doubled by the new owner. The structure was able to house a theater only because Grauman had established one there before a fire ordinance prohibiting it was passed. Before his tenancy was over, Grauman hired a crew of men with axes to demolish the interior of the Unique, so it could not be re-built for use as a theater.

By 1918, the first of the three noteworthy Los Angeles movie palaces was open for business: the Million Dollar Theatre. In 1921, David Grauman died suddenly, never able to see the completion of the Egyptian Theatre which opened the year after his death. Now working on his own, Sid Grauman began the building of his last theater, the Chinese Theatre in 1926. It was opened for a premiere on May 18, 1927. There was a crush of onlookers eager to have a glimpse of both the stars attending and the splendor of the building. Many of the fittings were imported from China and Chinese artisans were brought in to create works of sculpture which were originally located in the theater’s forecourt and are now housed inside the theater.

Grauman received an honorary Academy Award in 1949 for raising the standard for film exhibition. He has a star on the Hollywood Walk of Fame at 6379 Hollywood Blvd. He was one of the original 36 founders of the Academy of Motion Picture Arts and Sciences (AMPAS).

Grauman died of a coronary occlusion at Cedars-Sinai Medical Center in Los Angeles on March 5, 1950, twelve days shy of his 71st birthday. He was interred in the Sanctuary of Benediction alcove in the Memorial Terrace section of the Great Mausoleum at Forest Lawn Memorial Park Cemetery in Glendale, California.