Hoffman was born in Fairport, New York, the son of Marilyn L. O'Connor, a family court judge, lawyer, and civil rights activist, and Gordon S. Hoffman, a former Xerox executive. He has two sisters, Jill and Emily, and a brother, Gordy Hoffman, who scripted the 2002 film Love Liza, in which Philip starred. Hoffman has Irish ancestry; his father was Protestant and his mother was Catholic, but Hoffman was not raised with a deep commitment to either religious tradition. Hoffman's parents divorced when he was nine years old. His first acting role was as Radar O'Riley in Fairport High School's production of MASH directed by Marjorie Marshall in 1982.

Hoffman attended the 1984 Theater School at the New York State Summer School for the Arts. He received a BFA in drama in 1989 from New York University's Tisch School of the Arts. At NYU, he was a founding member of the notoriously short-lived and volatile theater company the Bullstoi Ensemble with actor Steven Schub and director Bennett