Edward Hutton was born on 6 December 1848 into a respectable middleclass family, with traditions of military service. Although he later mixed in the highest social circles, Hutton was not born to the aristocracy and was always sensitive about his social positioning. His ancestors, the Huttons of Lincolnshire, had their roots in the ‘yeomanry of Nottinghamshire’ of the early seventeenth century. His great-grandfather, Henry, was a barrister and elected Recorder of the city of Lincoln in 1784, establishing the family's respectability by taking possession, through his wife's inheritance, of Sherwood Hall near Mansfield in 1804. Henry's eldest son and Hutton's grandfather, Edward William, joined the 4th Royal Irish Dragoons in 1805 and retired as a lieutenant-colonel in 1838, after considerable operational service. His grandfather, Hutton later reflected, ‘much impressed my childish imagination as a Peninsular War veteran’. Three of Hutton's paternal uncles were also military officers. One, Thomas, joined the 4th Light Dragoons and commanded a squadron in the Crimean War at the Battle of Alma, the Siege of Sebastopol and at the ill-fated charge of the Light Brigade at Balaclava. Hutton's own father, Edward Thomas, however, did not choose a military career but rather, after school at Rugby, became a junior partner in the West Riding Bank.

In 1845 Hutton's father married Jacintha Charlotte (always known as Charlotte), daughter of the Reverend James Phipps Eyre. The Eyres of Hampshire were strongly liberal in political outlook and had a lineage that could be traced to members of Oliver Cromwell's Council. The joining of such a strongly Whig family to the Huttons was not viewed with satisfaction by Edward Thomas's parents. Consequently, when Hutton's father died on 15 February 1849, two months after his son's birth, Charlotte and her in-laws grew steadily estranged. Alone and isolated, Charlotte doted on her son and received his deep affection in return.