Walter Reed was born in Belroi, Virginia, to Lemuel Sutton Reed (a traveling Methodist minister) and his first wife, Pharaba White. During his youth, the family resided at Murfreesboro, North Carolina with his mother's family during his father's preaching tours. Two of his elder brothers later achieved distinction: J.C. became a minister in Virginia like their father, and Christopher a judge in Wichita, Kansas and later St. Louis, Missouri, Their childhood home is included in the Murfreesboro Historic District.
After the American Civil War, Rev. Reed remarried, to Mrs. Mary C. Byrd Kyle of Harrisonburg, Virginia, with whom he would have a daughter. Young Walter enrolled at the University of Virginia. After two years, Reed completed the M.D. degree in 1869, two months before he turned 18. He was the youngest-ever recipient of an M.D. from the university.
Reed then enrolled at the New York University's Bellevue Hospital Medical College in Manhattan, New York, where he obtained a second M.D. in 1870, as his brother Christopher attempted to set up a legal practice. After interning at several New York City hospitals, Walter Reed worked for the New York Board of Health until 1875.
He married Emilie (born Emily) Lawrence of North Carolina on April 26, 1876 and took her West with him. Later, Emilie would give birth to a son and a daughter, and the couple also adopted an aboriginal American girl while posted at frontier camps.
Finding his youth limited his influence, and dissatisfied with urban life, Reed joined the U.S. Army Medical Corps. This allowed him both professional opportunities and modest financial security to establish and support a family. After Reed passed a grueling thirty-hour examination in 1875, the army medical corps enlisted him as an assistant surgeon. By this time, two of his brothers were working in Kansas, and Walter soon was assigned postings in the American West. Over the next sixteen years, the Army assigned the career officer to different outposts, where he was responsible not only for American military and their dependents, but also various aboriginal American tribes, at one point looking after several hundred Apaches, including Geronimo. Reed noticed the devastation epidemics could wreak and maintained his concerns about sanitary conditions. During one of his last tours, he completed advanced coursework in pathology and bacteriology in the Johns Hopkins University Hospital Pathology Laboratory.