Panabaker was born in Augusta, Georgia to Donna and Harold Panabaker. Her younger sister Kay Panabaker is also an actress. She took a theater class at a summer camp and discovered her enjoyment in acting, so she started acting in community theaters at the age of 12, later auditioning for commercials. After moving to Naperville, Illinois, Danielle went to Crone Middle School and later Neuqua Valley High School in Naperville and participated in the speech team. She graduated from high school as valedictorian when she was only 14 years old. Later, feeling it was the only way to land acting roles regularly, Panabaker relocated to Los Angeles, California in order to pursue an acting career. In 2005, she earned her associate's degree and appeared on the National Dean's List. In the fall of 2006 she began her senior year at the University of California, Los Angeles, from which she graduated with a Bachelor of Arts in June 2007.