Lloyd was born Norman Perlmutter in Jersey City, New Jersey on November 8, 1914. Lloyd started working the vaudeville circuit in New York at age nine. When he graduated high school, he started attending classes at NYU but dropped out quickly. He worked his way up through repertory theater companies before starring on Broadway in 1935.
The budding star soon met Orson Welles, and when Welles launched his famed Mercury Theatre troupe, Lloyd was one of the first members.