Seabiscuit was foaled in Lexington, Kentucky, on May 23, 1933, from the mare Swing On and sire Hard Tack, a son of Man o' War. Seabiscuit was named for his father, as hardtack or "sea biscuit" is the name for a type of cracker eaten by sailors.
Initially, Seabiscuit was owned by the powerful Wheatley Stable and trained by "Sunny Jim" Fitzsimmons, who had taken Gallant Fox to the United States Triple Crown of Thoroughbred Racing. Fitzsimmons saw some potential in Seabiscuit but felt the horse was too lazy. Fitzsimmons devoted most of his time to training Omaha, who won the 1935 Triple Crown.
Seabiscuit was relegated to a heavy schedule of smaller races. He failed to win his first 17 races, usually finishing back in the field. After that, Fitzsimmons did not spend much time on him, and the horse was sometimes the butt of stable jokes. Seabiscuit began to gain attention after winning two races at Narragansett Park and setting a new track record in the second - a Claiming Stakes race. As a two-year-old, Seabiscuit raced 35 times (a heavy racing schedule), coming in first five times and finishing second seven times. These included three claiming races, in which he could have been purchased for $2500, but he had no takers.
While Seabiscuit had not lived up to his racing potential, he was not the poor performer Fitzsimmons had taken him for. His last two wins as a two-year-old came in minor stakes races. The next season, however, started with a similar pattern. The colt ran 12 times in less than four months, winning four times. One of those races was a cheap allowance race on the "sweltering afternoon of June 29", 1936, at Suffolk Downs. That is where trainer Tom Smith first laid eyes on Seabiscuit. His owners sold the horse to automobile entrepreneur Charles S. Howard for $8000 at Saratoga, in August.