Dench was born in Heworth, York, England, the daughter of Eleanora Olave (née Jones), a native of Dublin, and Reginald Arthur Dench, a doctor who met Judi's mother while studying medicine at Trinity College. Dench was raised a Methodist until, at age 13, she attended The Mount School, a Quaker Public Secondary school in York, becoming a Quaker. Her brothers, one of whom is actor Jeffery Dench, were born in Tyldesley, Lancashire. Notable relatives also include her niece, Emma Dench, a Roman historian and professor previously at Birkbeck, University of London, and currently at Harvard University, Cambridge, Massachusetts.
In Britain, Dench has developed a reputation as one of the greatest actresses of the post-war period, primarily through her work in theatre, which has been her forte throughout her career. She has more than once been named number one in polls for Britain's best actress.
Through her parents, Dench had regular contact with the theatre. Her father, a physician, was also the GP for the York Theatre, and her mother was its wardrobe mistress. Actors often stayed in the Dench household. During these years, Judi was involved on a non-professional basis in the first three productions of the modern revival of the York Mystery Plays in the 1950s. In 1957, in one of the last productions in which she appeared during this period, she played the role of the Virgin Mary, performed on a fixed stage in the Museum Gardens. Though she initially trained as a set designer, she became interested in drama school as her brother Jeff attended the Central School of Speech and Drama. She applied and was accepted, where she was a classmate of Vanessa Redgrave, graduating with a first class degree in drama and four acting prizes, one being the Gold Medal as Outstanding Student.
In September 1957, she made her first professional stage appearance with the Old Vic Company, at the Royal Court Theatre, Liverpool, as Ophelia in Hamlet, then her London debut in the same production at the Old Vic. She remained a member of the company for four seasons, 1957–1961, her roles including Katherine in Henry V in 1958 (which was also her New York debut), and as Juliet in Romeo and Juliet in October 1960, directed and designed by Franco Zeffirelli. During this period, she toured the United States and Canada, and appeared in Yugoslavia and at the Edinburgh Festival.
She joined the Royal Shakespeare Company in December 1961 playing Anya in The Cherry Orchard at the Aldwych Theatre in London, and made her Stratford-upon-Avon debut in April 1962 as Isabella in Measure for Measure. She subsequently spent seasons in repertory both with the Nottingham Playhouse from January 1963 (including a West African tour as Lady Macbeth for the British Council), and with the Oxford Playhouse Company from April 1964. That same year, she made her film debut in The Third Secret.