Pugh was born in the Tynte, Mountain Ash and grew up in Cilfynydd, near Pontypridd. He decided to become an actor after watching "From Russia with Love" at a cinema in Treforrest with a cousin and declaring his intentions to become an actor. A few years later he took night courses at Mountview Academy of Theatre Arts in North London, before being accepted at Rose Bruford College, where he graduated in 1976.