Munsey was of English ancestry, his family emigrated from England to America during the colonial era in the early 1600s. Early in life, Munsey ran a general store, at which he failed. He next became a telegraph operator and then manager of the Western Union telegraph office, in Augusta, Maine. Publishing was a formidable industry in Augusta at the time. Munsey was very ambitious, and being in charge of the telegraph office (a vital connection for the news media of his day) gave him a unique insight of the printing business. In 1882 he moved from Augusta to New York City and entered the publishing industry, having used his savings to purchase rights to several stories. He formed a partnership with a friend in New York and an Augusta stockbroker. After arriving in New York, the stockbroker backed out of the agreement and released his friend from any further financial obligations. Approaching a New York publisher, Munsey managed to edit and produce the first issue of his magazine, Golden Argosy, only two months and nine days after his arrival.
However, five months later, the publisher went bankrupt and entered receivership. By placing a claim for his unpaid salary, Munsey was able to take control of the magazine. Borrowing $300 from a friend in Maine, he barely managed to keep the magazine going while learning enough about the publishing industry to eventually succeed.