Kaʻiulani was the only child of Princess Miriam Likelike and Scottish businessman Archibald Scott Cleghorn. She was born in a downstairs bedroom of her parents' Emma Street mansion in Honolulu, on October 16, 1875, during the reign of her uncle King Kalākaua. Her birth was announced by gun salutes and the ringing of all of the bells in the city's churches. At the time of her birth, she became fourth in line of succession to the throne, moving to third in the line of succession upon the death of her uncle Leleiohoku II in 1877. She had three older half-sisters: Rose Kaipuala, Helen Maniʻiailehua, and Annie Pauahi, from her father's previous union with a Hawaiian woman.