Teuvo Tulio was born in 1912 as Theodor Tugai. His family roots were internationally entangled and extended as far as Turkey. His maternal grandmother appears to have come from Poland. His mother Helena married three times, and Theodor was the son of her first husband, Aleksander Tugai. Soon Theodor's surname changed to that of Helene's second husband, Peter Derodzinsky, who, Tulio emphasises, did not have a drop of blue blood in his veins, despite such speculations in Finland at the time when Tulio began to make a career in the budding film industry.

Tulio assumed that his parents’ marriage was one of convention. It did not last long, and Theodor, their only child, was born on a train heading for St Petersburg. At that point Helena was eighteen years old and dreamed of becoming a ballerina. As she tried to pursue a career in St Petersburg, Theodor returned to live with his grandparents in a farmhouse in Latvia. For a long time, Helena remained a remote figure for him, and he never saw her second husband, who died quite soon after the marriage. As Helena entered her third marriage with the Finn Alarik Rönnqvist, she moved to Helsinki. Theodor joined them, but he did not assume his stepfather's surname and resorted instead to his original surname, Tugai. For a long time, he remained at heart a country boy, as he spent his summers at his grandfather's farm as its prospective heir. His main interest there were the horses, and his experience with them was to be significant in his film career.

Moving to Helsinki at the age of ten meant adapting, not only to an urban environment, but also to a different language. Theodor could speak Latvian, German, English, Russian and a bit of Yiddish. Now he had to learn Finnish and Swedish. He entered the German secondary school, where he faced the further task of having to learn to write as well as speak German. Nevertheless, he enjoyed the international atmosphere of the school and the company of children from all over the world, ‘except Africa’. Getting along with the rough boys on the streets required a different kind of effort. Not only did he not have a full command of the local languages, he looked different and was called a Kirgizian, Chinaman or a Mongol.