Portman was born Natalie Hershlag (Hebrew: נטלי הרשלג‎) in Jerusalem, Israel. Her father, Avner Hershlag, is an Israeli doctor specializing in fertility and reproduction (reproductive endocrinology). Her mother, Shelley Stevens, is an American homemaker who now works as her agent. Portman's maternal ancestors were Jews from Austria and Russia and her paternal ancestors were Jews who immigrated to Israel from Poland and Romania. Her paternal grandfather's parents died in Auschwitz and her Romanian-born great-grandmother was a spy for the British during World War II.

Portman's parents met at a Jewish student center at Ohio State University where her mother was selling tickets. Her father returned to Israel, but the two corresponded and were married when her mother visited Israel a few years later. In 1984, when Portman was three years old, the family moved from Israel to the United States, where her father pursued his medical training. The family first lived in Washin