William Henry Gates III was born in Seattle, Washington to William H. Gates, Jr. (now Sr.) and Mary Maxwell Gates. His family was wealthy; his father was a prominent lawyer, his mother served on the board of directors for First Interstate Bank and the United Way, and her father, J. W. Maxwell, was a national bank president. Gates has one older sister, Kristi (Kristianne), and one younger sister, Libby. He was the fourth of his name in his family, but was known as William Gates III or "Trey" because his father had dropped his own "III" suffix. Several writers claim that Maxwell set up a million-dollar trust fund for Gates. A 1993 biographer who interviewed both Gates and his parents (among other sources) found no evidence of this and dismissed it as one of the "fictions" surrounding Gates's fortune. Gates denied the trust fund story in a 1994 interview and indirectly in his 1995 book The Road Ahead.
Gates excelled in elementary school, particularly in mathematics and the sciences. At thirteen he enrolled in the Lakeside School, Seattle's most exclusive preparatory school where tuition in 1967 was $5,000 (Harvard tuition that year was $1,760). When he was in the eighth grade, the school mothers used proceeds from a rummage sale to buy Lakeside an ASR-33 teletype terminal and a block of computer time on a General Electric computer. Gates took an interest in programming the GE system in BASIC and was excused from math classes to pursue his interest. After the Mothers Club donation was exhausted he and other students sought time on other systems, including DEC PDP minicomputers. One of these systems was a PDP-10 belonging to Computer Center Corporation, which banned the Lakeside students for the summer after it caught them exploiting bugs in the operating system to obtain free computer time.
At the end of the ban, the Lakeside students (Gates, Paul Allen, Ric Weiland, and Kent Evans) offered to find bugs in CCC's software in exchange for free computer time. Rather than use the system via teletype, Gates went to CCC's offices and studied source code for various programs that ran on the system, not only in BASIC but FORTRAN, LISP, and machine language as well. The arrangement with CCC continued until 1970, when it went out of business. The following year Information Sciences Inc. hired the Lakeside students to write a payroll program in COBOL, providing them not only computer time but royalties as well. At age 14, Gates also formed a venture with Allen, called Traf-O-Data, to make traffic counters based on the Intel 8008 processor. That first year he made $20,000, however when his age was discovered business slowed.
As a youth, Bill Gates was active in the Boy Scouts of America where he achieved its second highest rank, Life Scout.
According to a press inquiry, Bill Gates stated that he scored 1590 on his SATs. He enrolled at Harvard University in the fall of 1973 intending to get a pre-law degree, but did not have a definite study plan. While at Harvard, he met his future business partner, Steve Ballmer. At the same time, he co-authored and published a paper on algorithms with computer scientist Christos Papadimitriou.