Theile was born in Maryborough to Alice and Egmont Theile, who ran a husband and wife medical practice. Both had graduated from the University of Sydney, with his father originally being of German descent. He learnt to swim at the age of five, along with his three sisters after being enrolled in a swimming program by his parents. He developed a love of swimming, which relieved him from the boredom of the town, as "the local pool gave us something to do".