He was the first of four sons born to Murry Cuthbert and Maud Butler Falkner. When William later added a u to the family name, he was, he said, simply restoring the original spelling, which was said to have been simplified by his great-grandfather, Col. William Clark Falkner, prominent Mississippi Civil War officer, postwar railroad builder, and author of a successful novel called The White Rose of Memphis (1882)--a figure who served as a prototype for the Col. John Sartoris of his great-grandson's fiction. According to his own testimony, William added the u again so as to distinguish himself from his great-grandfather as an author and to bring the spelling into accord with its pronunciation.
In 1902, the Falkner family moved from New Albany to Oxford, Mississippi, where Murry C. Falkner first tried several unsuccessful business ventures, finally settling into the position of secretary and business manager of the University of Mississippi.Young William attended school with little enthusiasm and stayed in high school for only a couple of years, so his father got him a job as a bookkeeper in the First National Bank of Oxford, which his grandfather, John Wesley Thompson Falkner, had helped establish and had served as its first president.