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Fernando was born in Piedrahíta, Province of Ávila, on 29 October 1507. He was the son of García Álvarez de Toledo y Zúñiga, heir of Fadrique Álvarez de Toledo and Enríquez de Quiñones, II Duke of Alba de Tormes, and of Beatriz Pimentel, daughter of Rodrigo Alonso Pimentel, IV Count - I Duke of Benavente and his wife, María Pacheco. Fernando was orphaned at age three when his father, García, died during a campaign on the island of Djerba in Africa in 1510. At the age of six, Fernando accompanied his grandfather, the second duke of Alba on a military mission to capture Navarre.
His youth and education were typical for Castilian nobility of the age. He was educated at the ducal court of the House of Alba, located in the Castle Palace of Alba de Tormes, by two Italian preceptors, Bernardo Gentile - a Sicilian Benedictine - and Severo Marini and by the Spanish Renaissance poet and writer Juan Boscan. He was educated in Roman Catholicism and humanism. He mastered Latin and knew French, English and German.
In 1524, when he was seventeen, he joined the troops of Constable of Castile, Íñigo Fernández de Velasco, II Duke of Frías, during the capture of Fuenterrabía, then occupied by France and Navarre. For his role in the siege, Fernando was appointed governor of Fuenterrabía.
When his grandfather Fadrique died in 1531, the ducal title passed to Fernando as the firstborn son of Garcia. Throughout his adulthood, he served the Spanish monarchs Charles I and his successor Philip II.