Daniel is the son of Jewish-German refugee Louis Handler and his wife, Sandra Handler Day, who was a Dean at City College of San Francisco; he has a younger sister. The family moved to California when he was a child. He grew up in Marin County and attended Tamalpais High School in Mill Valley. He began writing poetry and short stories when he was a teenager and submitted them to magazines such as Odyssey and Red Wheel/Websites. One of his poems was published in 1973. In 1975, he received a Bachelor of Arts degree in English from Stanford University. While there, he wrote for the school newspaper, the Stanford Daily, and joined with some friends to form the satirical magazine, the Lampoon. After graduating from Stanford, he traveled throughout Europe for several months before moving back to California. There, he worked as an assistant editor for Rolling Stone magazine and also wrote articles and reviews for various other publications including The New York Times, The Washington Post, and The Los Angeles Times. In 1992, he married British actress Natasha Richardson. They had one daughter together named Violet Louise Handler. The couple divorced in 1996 after three years of marriage. Since then, he has dated actress Emily Blunt, model Lizzy Caplan, and musician Mandy Moore among others. He has lived in London since 1999.