Muthulakshmi Reddi was born in the princely state of Pudukottai of Tamil Nadu. In spite of various constraints faced by girls in India of her time, she could complete her higher education, and was admitted into medical profession. In 1907, she joined the Madras Medical College, where she achieved a brilliant academic record. With several gold medals and prizes to her credit, Muthulakshmi graduated in 1912 to become one of the first woman doctors in India. Soon thereafter, she came under the influence of Annie Besant, and then of Mahatma Gandhi.
Her father was S. Narayanasami (Brahmin) and the principal of Maharaja's College. Her mother was Chandrammal, born to the Isai Vellalar community. S. Narayanasami broke with tradition and sent Muthulakshmi to school. The child's enthusiasm for learning was so great that Muthulakshmi's teachers decided to instruct her in subjects beyond those approved by her father. At the onset of puberty she was obliged to leave school, but tutoring continued at home. Chandrammal wanted to search for a bridegroom but Muthulakshmi had different aspirations. She expressed a need to be a different woman from the common lot. She pitied women for their subordination to men and inwardly rebelled whenever she heard people say that only boys needed education.
When Muthulakshmi passed the matriculation exam she applied for admission to Maharaja's College but her application was not welcomed by the principal at the time or the parents of other students. Her gender was a factor and so was her background. The principal thought she might "demoralize" the male students. The somewhat enlightened Maharaja of Pudukottah ignored these objections, admitted her to the college, and gave her a scholarship. Her father suggested she become a school teacher but she had higher aspirations. She entered Madras Medical College, completed her studies in 1912, and became house surgeon in the Government Hospital for Women and Children in Chennai. She later married Dr. D. T. Sandara Reddy on the demand that he promised to "always respect me as an equal and never cross my wishes." In 1914, when she was twenty-eight years of age, they married in accordance with the 1872 Native Marriage Act.