Mukherjee was born on 29 September 1909 in Jhansi into an educated, middle-class Bengali Hindu family, the second of four brothers. His father, who belonged to minor gentry, had received an English education and was in government service. The family, at that time, had nothing to do with the entertainment business or any other trade; however, not only Sasadhar but also two of his three brothers were to make a name for themselves in the film industry. Mukherjee's younger brothers were film director Subodh Mukherjee and film producer Prabodh Mukherjee. His elder brother was Ravindramohan Mukherjee, who had little contact with the film industry, but whose grand-daughter is the successful actress Rani Mukerji.