Hathaway was born in Brooklyn, New York, to Gerald Hathaway, a lawyer, and Kate, an actress who inspired Hathaway to follow in her footsteps. The family moved to Millburn, New Jersey, when she was six years old. She has an older brother, Michael, and a younger brother, Thomas. Hathaway has mainly Irish and French ancestry.
As a child, Hathaway was in a Montessori program at Brooklyn Heights Montessori School as a preschooler and was then able to enter first grade at the Wyoming Elementary School in Millburn, Hathaway graduated from Millburn High School where she participated in many school plays; her high school performance as Winnifred in Once Upon a Mattress garnered her a Paper Mill Playhouse Rising Star Award nomination for Best Performance by a High School Actress. She spent several semesters studying as an English major and Women's Studies minor at Vassar College in Poughkeepsie, New York, before transferring to New York University's Gallatin School of Individualized Study, referring to her college enrollment as one of her best decisions, because she enjoyed being with others who were trying to "grow up". Hathaway was a member of the Barrow Group Theater Company's acting program and was the first teenager ever admitted into the program.
A soprano, Hathaway performed in 1998 and 1999 with the All-Eastern U.S. High School Honors Chorus at Carnegie Hall and has performed in plays at Seton Hall Prep in West Orange, NJ. Three days after her 1999 performance at Carnegie Hall, she was cast in the short-lived Fox television series Get Real, at the age of sixteen.
Hathaway is a trained stage actress and has stated that she prefers performing on stage to film roles. Her acting style has been compared to Judy Garland and Audrey Hepburn. She cites Hepburn as one of her favorite actresses and Meryl Streep as her idol.
Hathaway's first role in a motion picture was as Jean Sabin in The Other Side of Heaven, opposite Christopher Gorham. Hathaway began appearing in more dramatic roles after The Princess Diaries 2. Hathaway's 2010 film projects include a Tim Burton-directed adaptation of Alice's Adventures in Wonderland and Through the Looking-Glass.
In early 2007, Hathaway spoke of her experiences with depression during her teenage years, saying that she eventually overcame the disorder without medication.
In 2004, Hathaway began a relationship with Italian real estate developer Raffaello Follieri. During their relationship, Hathaway took part in the development of the charitable Follieri Foundation, serving as a financial donor as well as a member of the foundation's board of directors until 2007. A Manhattan-based charity founded in 2003 focusing on programs such as providing vaccinations for children in Third World nations, the organization had come under investigation in June 2008 by the IRS, for failing to file tax papers required from non-profit organizations. Citing the fear that this and other ongoing legal issues involving Follieri would become detrimental to her acting career, Hathaway ended her relationship with Follieri in mid-June 2008.
Follieri was arrested in June 2008 on fraud charges for allegedly fleecing investors out of millions of dollars in a scheme in which Follieri posed as the Vatican's point man on real estate investing. It was reported that the FBI confiscated Hathaway's private journals from Follieri's New York City apartment as part of their ongoing investigation into Follieri's activities; however, Hathaway was not charged with any crime. On October 23, 2008, after earlier pleading guilty, Follieri was sentenced to four and a half years in prison.
In the October 2008 issue of W Magazine, Hathaway spoke for the first time of the break-up and Follieri's subsequent arrest. She related that she "spent a week in shock" after Follieri's arrest, and credited the kindness of friends for her ability to keep working during such difficult times.
As of November 2008, Hathaway is reportedly in a relationship with actor Adam Shulman.