Peete was born Holly Elizabeth Robinson in Mount Airy, Philadelphia, Pennsylvania, the daughter of Dolores and Matt Robinson (the original Gordon on Sesame Street). Her mother was a school teacher, in public relations, and later a personal talent manager, and her father a producer/writer. She has an older brother named Matthew Thomas Robinson III. She attended Greene Street Friends School in nearby Germantown. In 1974, her family moved to California. Peete graduated from Santa Monica High School in Santa Monica, California, where her classmates included Rob Lowe. Peete graduated from Sarah Lawrence College with a degree in psychology and French. Peete studied abroad for a year at the Sorbonne, and is fluent in French. While there she sang in Paris nightclubs, including a performance with jazz musician Lionel Hampton at the Hotel Meridian Jazz Club.