It was widely believed, for many years, that Bix's real name was Leon Bismark Beiderbecke. It is now known that this — like so many other myths about Bix — is untrue. His real name was Leon Bix Beiderbecke. Bismark was a family name, reflecting the family's German origins, but it was not given to Bix.

Leon Bix Beiderbecke was born in Davenport, Iowa to a middle-class family. As a teenager he would sneak off to the banks of the Mississippi to listen to the bands play on the riverboats that would come up from the south.

Partially due to frequent absences due to illness, Bix's grades suffered. His parents felt that sending him to the exclusive Lake Forest Academy in Lake Forest, Illinois, just northwest of Chicago, would provide the attention and discipline needed to improve his schooling.

Bix's schooling there soon suffered when the only subjects he showed avid interest in were music and sports. Bix soon began going into Chicago as often as possible to catch the hot jazz bands of the day at clubs and speakeasies around Chicago, and too often didn't return in time or was found out the next day.