Born Paul Georg Julius Hernried in the city of Trieste, then part of the Austro-Hungarian Empire (now Italy), Henreid was the son of Maria-Luise (Lendecke) and Karl Alphons Hernried, a Viennese banker, born as Carl Hirsch, who converted in 1904 from Judaism to Roman Catholicism. Henreid's father died in April 1916, and the family fortune had dwindled by the time he graduated from the exclusive Maria Theresianische Academie.