Shahid Kapoor was born in New Delhi on 25 February 1981 to actor Pankaj Kapur and actor-dancer Neelima Azeem. His parents divorced when he was three years old; his father shifted to Mumbai (and married the actress Supriya Pathak) and Kapoor continued living in Delhi with his mother and maternal grandparents. His grandparents were journalists for the Russian magazine Sputnik, and Kapoor was particularly fond of his grandfather: "He would walk me to school every single day. He would talk to me about dad, with whom he shared a great relationship, and read out his letters to me."

Having noticed Kapoor in the Aryans' music video "Aankhon Mein", the producer Ramesh Taurani was keen to cast him in a film. However, upon meeting him, Taurani thought Kapoor, who was 20 years old at the time, to be too young and underweight to become an actor, and encouraged him to wait for a few years. Kapoor, meanwhile, turned down a lead role in N. Chandra's sex comedy Style in hopes of working with Taurani. Taurani found a suitable project for Kapoor in the teenage romance Ishq Vishk (2003), which Ken Ghosh was directing for his company. Kapoor, who trained extensively for a bulkier physical build, was eventually hired. Before beginning work on the film, he attended acting workshops with Naseeruddin Shah and Satyadev Dubey. Ishq Vishk tells the story of Rajiv Mathur (Kapoor), a high-school student who engages in a romantic affair with two classmates of contrasting personalities (played by Amrita Rao and Shenaz Treasurywala). Kapoor was attracted to the idea of playing an unlikable lead since it was a departure from the traditional portrayal of teenage heroes in Indian films. Writing for The Hindu, the critic Ziya Us Salam did not find him to be "hero material", adding that "boyhood seems to have overstayed on his face - but he is not necessarily bad in the acting department." The film, however, proved to be a sleeper hit at the box office and won Kapoor the Filmfare Award for Best Male Debut. Following his debut, Kapoor reunited with Ghosh in a film he considered to be drastically different from Ishq Vishk. The thriller Fida (2004) featured him as a love-struck student who is manipulated by a woman (Kareena Kapoor) and her lover (Fardeen Khan) to rob a bank. Despite criticising the film, Rama Sharma of The Tribune wrote that Kapoor "shines in his role. He looks fresh. As an impulsive emotional and innocent guy, who is sucked into crime because of these very qualities, he manages to evoke your sympathies." Later that year, Kapoor appeared in the romantic comedy Dil Maange More in which he was paired opposite three women: Soha Ali Khan, Tulip Joshi, and Ayesha Takia. Patcy N of Rediff.com praised his dancing skills but was wary of his imitation of Shah Rukh Khan's acting style. Both his 2004 releases were commercially unsuccessful. The series of poorly received films continued in 2005, when all three of Kapoor's films failed at the box office. His first two releases that year were the comedies Deewane Huye Paagal and Vaah! Life Ho Toh Aisi!, both of which were largely panned. The former was plagiarised from the Hollywood film There's Something About Mary in which Kapoor played one of Rimi Sen's love interests; the critic Khalid Mohamed found Kapoor to be "the only likeable element in this travesty" but Namrata Joshi of Outlook labelled him "colourless" and criticised his pairing with Sen. His final role was that of a righteous teenager drawn towards a life of indulgence in John Matthew Matthan's drama Shikhar, co-starring Ajay Devgan, Bipasha Basu and Amrita Rao. The critic Sukanya Verma found Kapoor to be miscast as a village boy in the film, but noted that he was "never short of spontaneity and youthful exuberance".

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