Reid was born in Johnstone, Renfrewshire, Scotland. He and his family immigrated to Australia when he was young. They initially settled in Melbourne, but moved to Sydney when Reid was 13, at which point he left school and began working as a clerk. He later joined the New South Wales civil service, and rose through the ranks to become secretary of the Attorney-General's Department. Reid was also something of a public intellectual, publishing several works in defence of liberalism and free trade. He began studying law in 1876 and was admitted to the bar in 1879. In 1880, he resigned from the civil service to run for parliament, winning election to the New South Wales Legislative Assembly.
Reid retained the leadership of the Free Trade Party after federation, and consequently became Australia's first Leader of the Opposition. For the first few years, the Protectionist Party governed with the support of the Labour Party. Alfred Deakin's Protectionist minority government collapsed in April 1904, and he was briefly succeeded by Labour's Chris Watson, who proved unable to govern and resigned after four months. As a result, Reid became prime minister in August 1904, heading yet another minority government. He included four Protectionists in his cabinet, but was unable to achieve much before his government was brought down in July 1905. One notable exception was the passage of the landmark Commonwealth Conciliation and Arbitration ACT, which dealt with industrial relations.
Reid was born on 25 February 1845 in Johnstone, Renfrewshire, Scotland. He was the fifth of seven children born to Marion (née Crybbace) and John Reid; he had four older brothers and two younger sisters. He was named after
George Houstoun, a former Conservative MP for the Renfrewshire constituency who had died a few years earlier. Reid's father, the son of a farmer, was born in Tarbolton, Ayrshire. At the time of George's birth he was a minister in the Church of Scotland, which he had joined in 1839 after previously ministering in various secessionist Presbyterian churches; he remained loyal to the established church in the Disruption of 1843. In 1834, he had married the daughter of another minister, Edward Crybbace; she was about nine years his junior.
In April 1845, Reid and his family moved to Liverpool, England, where his father had been appointed minister of an expatriate Presbyterian congregation. His two younger sisters were born there. The family struggled financially, and his father made the decision to emigrate to Australia. Reid arrived in Melbourne in May 1852, and his father subsequently led congregations in Essendon and North Melbourne. He moved the family to Sydney in 1858. Reid received his only formal schooling at the Melbourne Academy, now known as Scotch College. He received a classical education, and in later life recalled that he had "no appetite for that wide range of metaphysical propositions which juveniles were expected to comprehend"; he found Greek a "lazy horror". He left school aged about 13, when the family settled in Sydney, and began working as a junior clerk in a merchant's counting house. At the age of 15 he joined the debating society at the Sydney Mechanics' School of Arts, and according to his autobiography, "a more crude novice than he had never begun the practise of public speaking". In Sydney, Reid's father became a colleague of John Dunmore Lang at the Scots Church, and then from 1862 until his death in 1867 was the minister of the Mariners' Church on George Street. His mother, who died in 1885, was involved in the ragged schools movement. In later life, Reid praised his parents for his good upbringing.