Gorcey was born in New York City on June 3, 1917, the son of Josephine (née Condon), an Irish Catholic immigrant, and Bernard Gorcey, a Russian Jewish immigrant. Both were vaudevillian actors of short stature. Bernard Gorcey was 4 ft 10 in (1.47 m) and his wife was 4 ft 11 in (1.50 m). Their son would reach 5 ft 6 in (1.68 m) in adulthood.
In the 1930s, Gorcey's father lived apart from the family while working in theater and film. When he returned in 1935, he and Leo's younger brother David Gorcey persuaded Leo to audition for a small part in the play Dead End. Leo had just lost a job as a plumber's apprentice and wished to emulate his father's modest success. The Gorcey boys were cast in small roles as two members of the East 53rd Place Gang (originally dubbed the "2nd Avenue Boys") in the play Dead End by Sidney Kingsley. Charles Duncan, originally cast as Spit, left the play, and Gorcey, his understudy, was promoted. Gorcey created the stage persona of a quarrelsome guttersnipe whose greatest joy was to make trouble.
In 1937, Samuel Goldwyn made the popular play into a film of the same name and transported the six rowdy young men to Hollywood. Gorcey became one of the busiest actors in Hollywood during the following 20 years, starring in seven Dead End Kids films between 1937 and 1939, 21 East Side Kids films between 1940 and 1945, and 41 Bowery Boys films between 1946 and 1955.

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