Mansfield was born Kathleen Mansfield Beauchamp, in 1888, into a socially prominent family in Wellington, New Zealand. The daughter of a banker and born to a middle-class colonial family, she was also a first cousin of author Countess Elizabeth von Arnim. Mansfield had two older sisters and a younger brother, born in 1894. Her father, Harold Beauchamp, went on to become the chairman of the Bank of New Zealand and was also knighted. The Mansfield family moved to Karori in 1893, where Mansfield would spend the happiest years of her childhood; she later used her memories of this time as an inspiration for the Prelude story.
Her first published stories appeared in the High School Reporter and the Wellington Girls’ High School magazine (the family returned to Wellington proper in 1898), in 1898 and 1899. She became enamoured with a cellist, Arnold Trowell (Mansfield herself was an accomplished cellist, having received lessons from Trowell’s father), in 1902, although the feelings were largely unreciprocated. Mansfield wrote, in her journals, of feeling alienated to some extent in New Zealand, and, in general terms, of how she became disillusioned due to the repression of the Māori people—who were often portrayed in a sympathetic or positive light in her later stories, such as How Pearl Button Was Kidnapped.