Goldwater was born in Phoenix in what was then the Arizona Territory, the son of Baron M. Goldwater and his wife, Hattie Josephine "JoJo" Williams. His father's family had founded Goldwater's, a leading upscale department store in Phoenix. Goldwater's paternal grandfather, Michel Goldwasser, a Polish Jew, was born in 1821 in Konin, Poland, whence he immigrated to London following the Revolutions of 1848. Soon after arriving in London, he anglicized his name from "Goldwasser" to "Goldwater." Michel married Sarah Nathan, a member of an English Jewish family, in the Great Synagogue of London.
His father was Jewish and his mother, who was Episcopalian, came from a New England family that included the theologian Roger Williams of Rhode Island. Goldwater's parents were married in an Episcopal church in Phoenix; for his entire life, Goldwater was an Episcopalian, though on rare occasions he referred to himself as Jewish. While he did not often attend church, he stated that "If a man acts in a religious way, an ethical way, then he's really a religious man—and it doesn't have a lot to do with how often he gets inside a church."
The family department store made the Goldwaters comfortably wealthy. Goldwater graduated from Staunton Military Academy, an elite private school in Virginia, and attended the University of Arizona for one year, where he joined the Sigma Chi fraternity. Barry had never been close to his father, but he took over the family business after Baron's death in 1930. He became a Republican (in a heavily Democratic state), promoted innovative business practices, and opposed the New Deal, especially because it fostered labor unions. Goldwater came to know former President Herbert Hoover, whose conservative politics he admired greatly.
In 1934, he married Margaret "Peggy" Johnson, daughter of a prominent industrialist from Muncie, Indiana. They had four children: Joanne (born January 1, 1936), Barry (born July 15, 1938), Michael (born March 15, 1940), and Peggy (born July 27, 1944). Goldwater became a widower in 1985, and in 1992 he married Susan Wechsler, a nurse 32 years his junior.
Goldwater's son Barry Goldwater Jr. served as a United States House of Representatives member from California from 1969 to 1983.
Goldwater's uncle Morris Goldwater (1852–1939) was an Arizona territorial and state legislator, mayor of Prescott, Arizona, and a businessman.
Goldwater's grandson, Ty Ross, a former Zoli model, is openly gay and HIV positive, and the one who inspired the elder Goldwater "to become an octogenarian proponent of gay civil rights."
With the American entry into World War II, Goldwater received a reserve commission in the United States Army Air Forces. He became a pilot assigned to the Ferry Command, a newly formed unit that flew aircraft and supplies to war zones worldwide. He spent most of the war flying between the U.S. and India, via the Azores and North Africa or South America, Nigeria, and Central Africa. He also flew "the hump" over the Himalayas to deliver supplies to the Republic of China.
Following World War II, Goldwater was a leading proponent of creating the United States Air Force Academy, and later served on the Academy's Board of Visitors. The visitor center at the Academy is now named in his honor. As a colonel he also founded the Arizona Air National Guard, and he would desegregate it two years before the rest of the U.S. military. Goldwater was instrumental in pushing the Pentagon to support desegregation of the armed services.
Remaining in the Arizona Air National Guard and Air Force Reserve after the war, he eventually retired as a Command Pilot with the rank of major general. By that time, he had flown 165 different types of aircraft. As an Air Force Reserve major general, he continued piloting aircraft, to include the B-52 Stratofortress, until late in his military career. He would remind those who called him "rash" of the old saying that "there are no old, bold pilots".
Goldwater ran track and cross country in high school, where he specialized in the 880 yard run. His parents strongly encouraged him to compete in these sports, to Goldwater's dismay. He often went by the nickname of "Rolling Thunder."
In 1940, Goldwater became one of the first people to run the Colorado River recreationally through Grand Canyon participating as an oarsman on Norman Nevills' second commercial river trip. Goldwater joined them in Green River, Utah, and rowed his own boat down to Lake Mead.
In 1970, the Arizona Historical Foundation published the daily journal Goldwater had maintained on the Grand Canyon journey, including his photographs, in a 209-page volume titled Delightful Journey.
In 1963, he joined the Arizona Society of the Sons of the American Revolution. He was also a lifetime member of the Veterans of Foreign Wars, the American Legion, and Sigma Chi fraternity. He belonged to both the York Rite and Scottish Rite of Freemasonry, and was awarded the 33rd degree in the Scottish Rite.