Rai was born on 1 November 1973 into a Tulu speaking Tuluva Bunt family in Mangaluru, Karnataka.Her father, Krishnaraj, who died on 18 March 2017, was an Army biologist, while her mother, Brinda, is a homemaker. She has one elder brother, Aditya Rai, who is an engineer in the merchant navy. Rai’s movie Dil Ka Rishta (2003) was co-produced by her brother and co-written by her mother.The family moved to Mumbai, where Rai attended the Arya Vidya Mandir High School.Rai did her intermediate schooling at Jai Hind College for a year,and then joined DG Ruparel College in Matunga, securing 90 percent in the HSC exams.
She trained in classical dance and music for five years during her teens.Her favourite subject was zoology, so she initially considered a career in medicine. Then with plans to become an architect, she enrolled at Rachana Sansad Academy of Architecture, but later gave up her education to pursue a career in modelling.
In 1991, Rai won an international supermodel contest (organised by Ford) and was eventually featured in the American edition of Vogue.In 1993, Rai gained huge public recognition for her appearance in a Pepsi commercial with actors Aamir Khan and Mahima Chaudhry. The single line – “Hi, I’m Sanjana,” of her dialogue in the commercial made her instantly famous.In the 1994 Miss India pageant, she won second place, behind Sushmita Sen, and was crowned Miss India World, also winning five other sub-titles, “Miss Catwalk”, “Miss Miraculous”, “Miss Photogenic”, “Miss Perfect Ten” and “Miss Popular”.With Sen representing India at the Miss Universe pageant, Rai’s duties as the first runner-up included representing India in the rival Miss World Pageant, held that year in Sun City, South Africa. She went on to win the crown where she also won the “Miss Photogenic” award and Miss World Continental Queen of Beauty − Asia and Oceania. After winning the pageant, Rai spoke of her dream for peace for this world, and her desire to be an ambassador of peace during her one-year reign in London. Rai continued to pursue a career as a model until she became an actress.