Rhys-Davids was born to Thomas William Rhys-Davids and Caroline Augusta Foley Rhys-Davids in Forest Hill, London. His father was of Anglo-Welsh descent and his mother was English. Thomas Rhys-Davids was born in 1843 the son of a Congregational minister. After schooling at Brighton he refused to be trained as a solicitor and he enrolled at Breslau University to study Sanskrit in which he took a PhD. While there, he learned Pali and studied Buddhism. In 1864 he joined the Ceylon Civil Service as acting secretary to the Governor. While acting as a magistrate Rhys-Davids ruled in favour of a native over an Englishmen during a land-ownership dispute leading him to be ostracised by the British community on the island. In 1872 he left for England. In 1877 he passed the Bar examination but practised little law. In 1877 he joined the Middle Temple and four years later founded the Pali Text Society, translating Buddhist literature. In 1882 he was appointed Professor of Pali at University College London. It was there he met Caroline Foley.