Epstein was born to a Jewish family in New York City and raised on the Lower East Side of Manhattan; his identical twin brother was Julius Epstein. Their father Harry was a livery stable owner in the days when horses were widely used in the city. He and his brother Julius attended Pennsylvania State College (now Penn State University), gaining his degree in 1931. Following college, Philip took up acting and Julius became a professional boxer.
Epstein was married to Lillian Targan from 1932. His son Leslie Epstein directs the creative writing program at Boston University and is a novelist. In 2003, Leslie published a fictionalized version of his boyhood titled San Remo Drive: A Novel from Memory. His grandson Theo Epstein is a former baseball executive who previously served as the president of baseball operations for the Chicago Cubs and as the general manager of the Boston Red Sox. His granddaughter Anya Epstein is a screenwriter.
After college the Epstein twins headed to Hollywood, hoping to work in the movie industry. They became successful screenwriters. Jack L. Warner, head of Warner Brothers, had a love-hate relationship with the Epstein twin brothers. He could not argue with their commercial success, but he deplored their pranks, their work habits and the hours they kept. In 1952, Warner gave the brothers' names to the House Un-American Activities Committee (HUAC). They never testified before the committee, but on a HUAC questionnaire, when asked if they ever were members of a "subversive organization," they wrote, "Yes. Warner Brothers."

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