Godden was born in Eastbourne, Sussex, England. She grew up with her three sisters in Narayanganj, colonial India (now in Bangladesh), where her father, a shipping company executive, worked for the Brahmaputra Steam Navigation Company. Her parents sent the girls to England for schooling, as was the custom of the time, but brought them back to Narayanganj when the First World War began. Godden returned to the United Kingdom with her sisters to continue her interrupted schooling in 1920, spending time at Moira House Girls School in Eastbourne and eventually training as a dance teacher. She went back to Calcutta in 1925 and opened a dance school for English and Indian children. Godden ran the school for 20 years with the help of her sister Nancy. During this time she published her first best-seller, the 1939 novel Black Narcissus.