Chong later starred in films Beat Street (1984), American Flyers (1985), The Color Purple (1985), Commando (1985), Soul Man (1986), The Principal (1987), Tales from the Darkside (1990), Time Runner (1993), and Boulevard (1994). She is the daughter of comedian and actor Tommy Chong.
Chong was born on February 28, 1961, in Edmonton, Alberta, Canada, the first daughter of actor/comedian Tommy Chong. Her father is of Chinese and Scots-Irish descent and her birth mother, Gail Lewis, was of Black Canadian descent. Her sister Robbi Chong, by Maxine Sneed, is a model and actress. They have three younger half-brothers (one adopted) and a half-sister by their father's second wife. In addition to Rae Dawn, two of her sisters and her adopted brother Marcus Chong have pursued acting careers.
Chong has said that her paternal grandfather left a poor village in China in the 1930s to live with an aunt in Vancouver, where Chinese immigrants were mostly sequestered in a small area due to racial discrimination, and that although he spoke Cantonese, he refused to teach it to his children or grandchildren. She said, "I think my grandfather had great racial shame, which was hard on us growing up. ... We grew up desperate to know anything about our Chinese culture." Later in life, though, her grandfather "saw the error of his ways and embraced his heritage."

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