The son of Irene (née Roth) and Richard Pipes, Daniel Pipes was born into a Jewish family in Boston, Massachusetts, in 1949. His parents had each fled German-occupied Poland with their families, and they met in the United States. His father, Richard Pipes, was a historian at Harvard University, specializing in Russia, and Daniel Pipes grew up primarily in the Cambridge, Massachusetts area.

Pipes attended the Harvard pre-school, then received a private school education, partly abroad. He enrolled in Harvard University, where his father was a professor, in the fall of 1967. For his first two years he studied mathematics but has said "I wasn't smart enough. So I chose to become a historian." He said he "found the material too abstract." He credits visits to the Sahara Desert in 1968 and the Sinai Desert in 1969 for piquing his interest in the Arabic language, and travels in West Africa for piquing his interest in the Islamic world. He subsequently changed his major to Middle Eastern history, for the next two years studying Arabic and the Middle East, and obtained a B.A. in history in 1971. His senior thesis was titled "A Medieval Islamic Debate: The World Created in Eternity," a study of Muslim philosophers and Al-Ghazali. After graduating in 1971, Pipes spent two years in Cairo, where he continued learning Arabic and studied the Quran, which he states gave him an appreciation for Islam. He wrote a book on colloquial Egyptian Arabic, published in 1983. In all, he studied abroad for six years, three of them in Egypt.