Fisher was born in Beverly Hills, California, the daughter of singer Eddie Fisher and actress Debbie Reynolds; her paternal grandparents were Jewish immigrants from Russia. Her younger brother is Todd Fisher and her half-sisters are actresses Joely Fisher and Tricia Leigh Fisher, whose mother is actress Connie Stevens.

When Fisher was two, her parents divorced and her father married actress Elizabeth Taylor. The following year, her mother married shoe store chain owner Harry Karl. It was assumed from an early age that Fisher would go into the family business; she began appearing with her mother in Las Vegas at age 12. She attended Beverly Hills High School but left to join her mother on the road. She appeared as a debutante and singer in the hit Broadway revival Irene (1973) starring her mother.