Cameron was born in 1954 in Kapuskasing, Ontario, Canada, the son of Shirley (nee Lowe), an artist and nurse, and Phillip Cameron, an electrical engineer. His paternal great-great-great-grandfather emigrated from Balquhidder, Scotland, in 1825. Cameron grew up in Chippawa, Ontario, and attended Stamford Collegiate School in Niagara Falls, Ontario. His family moved to Brea, California in 1971, when Cameron was 17 years old.

He was the director, writer, producer, and production designer for Xenogenesis (1978). He then became an uncredited production assistant on Rock and Roll High School in 1979. While continuing to educate himself in filmmaking techniques, Cameron started working as a miniature model maker at Roger Corman Studios. Making rapidly produced, low-budget productions taught Cameron to work efficiently. He soon found employment as an art director in the sci-fi movie Battle Beyond the Stars (1980). He did special effects work design and direction on John Carpenter's Escape from New York (1981), acted as production designer on Galaxy of Terror (1981), and consulted on the design of Android (1982). Cameron was hired as the special effects director for the sequel to Piranha, entitled Piranha II: The Spawning in 1981. The original director, Miller Drake, left the project due to creative differences with producer Ovidio Assonitis, who then gave Cameron his first job as director. The interior scenes were filmed in Rome, Italy, while the underwater sequences were shot at Grand Cayman Island. The movie was to be produced in Jamaica. On location, production slowed due to numerous problems and adverse weather. James Cameron was fired after failing to get a close up of Carole Davis in her opening scene. Ovidio ordered Cameron to do the close-up the next day before he started on that day's shooting. Cameron spent the entire day sailing around the resort, reproducing the lighting but still failed to get the close-up. After he was fired, Ovidio invited Cameron to stay on location and assist in the shooting. Once in Rome, Ovidio took over the editing when Cameron was stricken with food poisoning. During his illness, Cameron had a nightmare about an invincible robot hitman sent from the future to kill him, giving him the idea for The Terminator, which later catapulted his film career.

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