Grace was born Thomas James Gabel in Fort Benning, Georgia, the eldest child of United States Army Major Thomas Gabel and Bonnie Gabel (née Grace). Grace has a brother named Mark, who is six years younger. The family moved frequently between military bases due to their father's military career, living briefly in Fort Hood, Texas; Pennsylvania; Ohio; Germany; and at a NATO post in Naples, Italy, during the Gulf War. When she was 8 years old while living in Italy, Grace bought her first guitar from Sears mail order with money saved from mowing lawns. Grace initially took guitar lessons from an army officer's wife, but ended up teaching herself how to play.