Madhavan was born on 1 June 1970 in Muzaffapur, India, to a Hindu Tamil Brahmin family. His father Ranganathan was a management executive with Tata Steel whilst his mother, Saroja was a manager with the Bank of India. His sister, Devika, is a software engineer settled in the United Kingdom. He had a Tamil-speaking upbringing in Bihar.
In 1988, Madhavan was chosen to represent India as its cultural ambassador from Rajaram College, Kolhapur to Canada after his graduation in electronics. At 22, he was awarded the Maharashtra NCC Best Cadet, allowing him to make a trip with seven others as NCC Cadets to England. Because of this honour, he received training with the Royal Army, the Navy and the Air Force, which he previously planned to join. However he was rejected from the opportunity, as he missed the age cut-off by six months. After he lost out on the place, he began taking courses in public speaking which eventually helped him venture into the film industry. He won the Indian Championship for Public Speaking and was subsequently selected to represent India at the Young Businessmen Conference in Tokyo, Japan in 1992.
In early 1996, Madhavan did a sandalwood talc advertisement for Santosh Sivan, who later recommended him to Mani Ratnam for a screen test for a role in Iruvar. Later in the same year, Mani Ratnam called Madhavan for the screen test, but left him out of the project citing that he thought his eyes looked too young for a senior role. As his film career failed to take off, Madhavan went on to feature in Hindi television serials, appearing as a crook in his first venture Yule Love Stories. He appeared in a leading roles in Zee TV's Banegi Apni Baat and later in Tol Mol Ke Bol. He went on to as a captain in Sea Hawks, as a convict in Yeh Kahan Aa Gaye Hum, and as an anchor in Tol Mol amongst others. His popularity on television, led to him securing his first film role in Is Raat Ki Subah Nahin, where he made a cameo appearance in a song as a club singer.