Nitobe was born in Morioka, Mutsu Province (present-day Iwate Prefecture). His father was a retainer to the local daimyo of the Nambu clan. His infant name was Inanosuke. Nitobe left Morioka for Tokyo in 1871 to become the heir to his uncle, Ota Tokitoshi, and adopted the name Ota Inazo. He later reverted to Nitobe when his brothers died.

Nitobe was in the second class of the Sapporo Agricultural College (now Hokkaido University). He was converted to Christianity under the strong legacy left by Dr. William S. Clark, the first Vice-Principal of the College, who had taught in Sapporo for eight months before Nitobe's class arrived in the second year after the opening of the college; thus they never personally crossed paths. Nitobe's classmates who converted to Christianity at the same time included Uchimura Kanzo. Nitobe and his friends were baptized by an American Methodist Episcopal missionary Bishop M.C. Harris. Nitobe's decision to study agriculture was due to a hope expressed by Emperor Meiji that the Nitobe family would continue to advance the field of agricultural development (Nitobe's father developed former waste land in the north of the Nambu domain near present-day Towada, now part of Aomori Prefecture, into productive farmland).

In 1883, Nitobe entered Tokyo Imperial University for further studies in English literature and in economics. Disappointed by the level of research in Tokyo, he quit the university and sought study opportunities in the United States.

In 1884, Nitobe traveled to the United States where he stayed for three years, and studied economics and political science at Johns Hopkins University in Baltimore, Maryland. While in Baltimore he became a member of the Religious Society of Friends (Quakers). It was through a Quaker community in Philadelphia that he met Mary Patterson Elkinton, whom he eventually married. He also influenced the establishment of the Friends School in Tokyo.

While at Johns Hopkins, he was granted an assistant professorship at his alma mater, the Sapporo Agricultural College, but was ordered to first obtain a doctorate in agricultural economics in Germany. He completed his degree after three years in Halle University and returned briefly to the United States to marry Mary Elkinton in Philadelphia.