Lively, the youngest of five children, was born in Tarzana, California, the daughter of actors Ernie and Elaine Lively. Raised as a Southern Baptist, Lively has two sisters, Lori and Robyn, and two brothers, Jason and Eric. Both of her parents and all four of her siblings are, or have been, in the entertainment industry. Her brother-in-law is Bart Johnson.

As a child, Lively was homeschooled (one of her homeschool classmates was actor Penn Badgley. Lively attended Burbank High School in Burbank where she participated in the National Show Choir, was senior class president and a cheerleader. Lively has said that she was not initially interested in acting. She wanted to attend Stanford University, but during the summer between her junior and senior year of high school, her brother made his agent send her out on a few auditions. Of the two auditions, she got the role of Bridget for The Sisterhood of the Traveling Pants.

Lively started out in film with a bit role in Sandman in 1998. In 2005, Lively played Bridget in The Sisterhood of the Traveling Pants, for which she received a Teen Choice Award nomination for "Choice Movie Breakout - Female." She will be reprising the role in 2008 in the sequel, The Sisterhood of the Traveling Pants 2, alongside co-stars Alexis Bledel America Ferreraand Amber Tamblyn She starred in Accepted, Simon Says, and Elvis and Anabelle in 2006. She also received the Breakthrough Award from Hollywood Life for her role in Accepted on December 10, 2006.

Lively was cast in the CW's new series Gossip Girl which premiered in September 2007 and plays Serena van der Woodsen in the teen drama, co-starring alongside Leighton Meester Penn Badgley Chace Crawford Taylor Momsenand Ed Westwick Her first magazine cover was the November 2007 issue of Cosmo Girl, where she discussed her time in high school and her career prior to Gossip Girl.[4] She has since appeared on the January 2008 cover of shopping magazine Lucky. She has more recently appeared on the March 2008 cover of Teen Vogue, as well as the May 2008 cover of NYLON with her Gossip Girl co-star Leighton Meester

Lively dated actor Kelly Blatz from 2004 to 2007; the two had been friends since childhood. In late 2007, it was reported that Lively was dating her Gossip Girl co-star and former childhood classmate Penn Badgley though Lively refused to ever comment on the rumors - in Teen Vogue interview, when asked if she was dating Badgley. Lively said that “I try not to talk about my dating life. I want to, but once you start, it’s all downhill from there.”. In May 2008, People magazine published photos of Lively and Badgley kissing while on vacation in Mayan Riviera, Mexico.