Diana Frances Spencer was born on 1 July 1961, in Park House, Sandringham, Norfolk. She was the fourth of five children of John Spencer, Viscount Althorp (1924–1992), and his first wife, Frances (née Roche; 1936–2004). The Spencer family has been closely allied with the British royal family for several generations. Both of Diana's grandmothers had served as ladies-in-waiting to Queen Elizabeth The Queen Mother. The Spencers were hoping for a boy to carry on the family line, and no name was chosen for a week, until they settled on Diana Frances, after her mother and after Lady Diana Spencer, a many-times-great-aunt who was also a prospective Princess of Wales.
On 30 August 1961, Diana was baptised at St. Mary Magdalene Church, Sandringham. She grew up with three siblings: Sarah, Jane, and Charles. Her infant brother, John, died shortly after his birth one year before Diana was born. The desire for an heir added strain to the Spencers' marriage, and Lady Althorp was reportedly sent to Harley Street clinics in London to determine the cause of the "problem". The experience was described as "humiliating" by Diana's younger brother, Charles: "It was a dreadful time for my parents and probably the root of their divorce because I don't think they ever got over it." Diana grew up in Park House, situated on the Sandringham estate. The Spencers leased the house from its owner, Queen Elizabeth II. The royal family frequently holidayed at the neighbouring Sandringham House, and Diana played with the Queen's sons Prince Andrew and Prince Edward.
Diana was seven years old when her parents divorced. Her mother later began a relationship with Peter Shand Kydd and married him in 1969. Diana lived with her mother in London during her parents' separation in 1967, but during that year's Christmas holidays, Lord Althorp refused to let Diana return to London with Lady Althorp. Shortly afterwards he won custody of Diana with support from his former mother-in-law, Ruth Roche, Baroness Fermoy. In 1972, Lord Althorp began a relationship with Raine, Countess of Dartmouth. They married at Caxton Hall, London in 1976. Diana's relationship with her stepmother was particularly bad. She resented Raine, whom she called a "bully", and on one occasion Diana "pushed her down the stairs". She later described her childhood as "very unhappy" and "very unstable, the whole thing". Diana became known as Lady Diana after her father later inherited the title of Earl Spencer in 1975, at which point her father moved the entire family from Park House to Althorp, the Spencer seat in Northamptonshire.