Carano was born in Dallas County, Texas, the middle daughter of Glenn Carano and Dana (Cason). She has two sisters. Carano has said that she is a "small percentage of Italian" descent. Her father played for the Dallas Cowboys as a backup quarterback from 1977–1983 and for the USFL Pittsburgh Maulers as a starter in 1984, their only year of operations.
She graduated from Trinity Christian High School in Las Vegas, Nevada where she led the girls basketball team to a state title. She also played volleyball and softball. She attended the University of Nevada, Reno for a year and then University of Nevada, Las Vegas for three, where she majored in psychology.