Living in a Chawl in Tilak Nagar, Punjabi-speaking Anil was born in 1959 to Surinder and Nirmal aka Suchitra Kapoor. He has an elder brother, Boney, a sister, Reena, and a younger brother, Sanjay. His dad used to be Shammi Kapoor's Secretary.
A loner, without many friends, he studied in the nearby O.L.P.S. (Our Lady of Perpetual Succor) School, and was an ardent fan of Bollywood flicks that were telecast during the Ganesh Maha Utsav every year. He was a fan of Raj Kapoor, and it was this that influenced his acting, and people saw him as a mimic of the legendary showman. He landed a role as a child artiste with Shashi Kapoor in the lead, but the movie (Tu Payal Main Geet) was never released.
After school, he went to study in St. Xaviers College. He commuted by bus and train from Chembur to Bombay V.T., and the walked the rest of the way. It was here that he met Mazhar Khan. A distracted Anil was kicked out of College in the second year due to his lack of presence. His attempts to join the Pune Film Institute were in vain, as he failed in the written examination. He then decided to join Roshan Taneja's Acting school