Mehta was born on 4 August 1845 in Bombay (now Mumbai) to a Parsi business family. His father, a Bombay-based businessman who also spent plenty of time in Calcutta, was not highly educated, but he did translate a Chemistry textbook into Gujarati and wrote a Geography textbook. Graduating from the Elphinstone College in 1864, Pherozeshah obtained his Master of Arts degree with honors six months later, becoming the first such Parsi, from the Bombay University (later re-established as University of Mumbai). Sir Alexander Grant, principal of the university, nominated him a Fellow of the University and tried to procure him a scholarship founded by Jamsetjee Jejeebhoy to study in Europe. However, Mehta did not avail himself of the scholarship.