Jayaram was born as youngest among three children to Subramaniyam Iyyer and Thankam at Perumbavoor, Kerala on 10 December 1965. His mother tongue is Tamil.His father is from Kerala settled Tamil Iyyer family and mother is from Thanjavur. He has an elder brother, late Venkit Ram and a elder sister, Manjula. He had his primary education from Government Boys High School, Perumbavoor. He pursued bachelors in Economics from Sree Sankara College, Kalady. He became a medical representative soon after college. Later he joined Kalabhavan and performed mimicry in many stages which paved him a way to film industry. Renowned Malayalam writer Malayattoor Ramakrishnan was Jayaram's maternal uncle.
He is married to actress Parvathy, on 7 September 1992, who is no longer active in films. Their son Kalidas Jayaram is a child film artist who won the National Film Award for Best Child Artist in 2003 for his second movie, Ente Veedu Appuvinteyum. Jayaram also has a daughter, Malavika. Currently he resides at Valasaravakkam, Tamil Nadu with family.