Charlotte Rae Lubotsky was born on April 22, 1926, in Milwaukee, Wisconsin, to Russian Jewish immigrants Esther (née Ottenstein) and Meyer Lubotsky, a retail tire business owner. Esther was a childhood friend of Israeli Prime Minister Golda Meir. Charlotte is one of three sisters, including Miriam and the late Beverly, who passed away on June 2, 1998.
Charlotte graduated from Shorewood High School in 1944. Her family lived in Milwaukee for the first ten years of her life before moving to Shorewood, Wisconsin. She began her career in radio and was involved with the Wauwatosa Children's Theatre. At the age of 16, she became an apprentice with the Port Players, a professional theater company that performed in Milwaukee during the summer. The company featured established actors such as Morton DaCosta, who later directed The Music Man on Broadway.
Charlotte attended Northwestern University but did not complete her studies. During her time at Northwestern, she met several future stars and producers, including Cloris Leachman, Agnes Nixon, Charlton Heston, Paul Lynde, Gerald Freedman, Claude Akins, and songwriter Sheldon Harnick. After a radio personality suggested that her last name wasn't suitable, she dropped it, much to her father's dismay.
Charlotte moved to New York City in 1948, where she began performing in theater and nightclubs. During her early years in New York, she worked at the Village Vanguard, a popular nightclub that featured up-and-coming talents such as singer Richard Dyer-Bennet. She also performed at the posh Blue Angel, which was home to budding talents like Barbra Streisand, Mike Nichols, and Elaine May. Charlotte eventually moved to Los Angeles in 1974.