Originally named Manikarnika at birth (nicknamed Manu), she was born on 19 November 1835 at Kashi (Varanasi) to a Maharashtrian Marathi Karhade Brahmin family as the daughter of Moropant Tambe and Bhagirathibai Tambe. She was also known as Chhabili by the Peshwa of Bithur because of her jolly ways. She lost her mother at the age of four. She was educated at home. Her father Moropant Tambe worked at the court of Peshwa at Bithur. The Peshwa of Bithur brought her up like his own daughter. The younger daughter of Peshwa Bajirao, Prachi, was influenced by Laxmi Bai.
Because of her father's influence at court, Rani Lakshmi Bai had more independence than most women, who were normally restricted to the zenana. She studied self defence, horsemanship, archery, and even formed her own army out of her female friends at court. Shah Dawar was Rani Lakshmibai's best friend.
She was married to Raja Gangadhar Rao Newalkar, the Maharaja of Jhansi in 1842, and became the queen of Jhansi. After their marriage, she was given the name Lakshmi Bai. Rani Lakshmi Bai gave birth to a son (Damodar Rao) in 1851. However, the child died when he was about four months old. After the death of their son, the Raja and Rani of Jhansi adopted Damodar Rao (who was later formally renamed Anand Rao). Anand Rao was the son of Gangadhar Rao's cousin. However, it is said that the Raja of Jhansi never recovered from his son's death, and he died on 21 November 1853.
Because Anand Rao was adopted and not biologically related to the Raja, the East India Company, under Governor-General Lord Dalhousie, was able to install the Doctrine of Lapse, rejecting Rao's claim to the throne. Dalhousie then annexed Jhansi, saying that the throne had become "lapsed" and thus put Jhansi under his "protection". In March 1854, the Rani was given a pension of 60,000 rupees and ordered to leave the palace at the Jhansi fort.
When the Maharaja died, Rani Lakshmi Bai