Kauikeaouli was born at Keauhou Bay, on Hawaiʻi island, the largest island of the Hawaiian Islands archipelago. He was the second son of King Kamehameha I and his highest ranking wife, Queen Keōpūolani, born in Maui. Early historians suggested June or July 1814, but one accepted date is August 11, 1813. Biographer P. Christiaan Klieger cites 17 March 1814 as his birthday.
He was of the highest kapu lineage. Kauikeaouli was about 16 years younger than his brother Liholiho, who ruled as Kamehameha II starting in 1819. He was named Kauikeaouli (placed in the dark clouds) Kaleiopapa Kuakamanolani Mahinalani Kalaninuiwaiakua Keaweaweʻulaokalani (the red trail or the roadway by which the god descends from heaven) after his maternal grandfather Kīwalaʻō.
He was promised to Kuakini in hānai, but at birth he appeared to be delivered stillborn, Kuakini did not wish to take him. But Chief Kaikioʻewa summoned his kaula (prophet) Kapihe who declared the baby would live.:8
Kauikeaouli was cleansed, laid on a rock, fanned, prayed over and sprinkled with water until he breathed, moved and cried. The prayer of Kapihe was to Kaʻōnohiokalā, "Child of God". The rock is preserved as a monument at Keauhou Bay. He was given to Kaikioʻewa to raise.
Kauikeaouli had a troubled childhood. He was torn between the Puritan Christian guidelines imposed on the kingdom by the kuhina nui (Queen Regent) who was his stepmother Kaʻahumanu, and the desires to honor the old traditions. Under the influence of Oʻahu's then governor, Boki, and a young Hawaiian-Tahitian priest named Kaomi, Kauikeaouli's aikāne partner, he rebelled against his Christian teachings, created the secret order of Hulumanu (Bird Feather), and named Kaomi his co-ruler in place of Kīnaʻu. By 1835 he had returned to ways of the missionaries.:334–339