William Coulter was born in 1959 in Ridgewood, New Jersey, the son of a classical singer who founded the Pro Arte Chorale, a professional choral group. William's early exposure to the classical techniques of choral music influenced his own guitar work. At the age of nine, Coulter began taking piano lessons, practicing on a borrowed piano. In his teens, the piano was replaced by an electric guitar, which he practiced in his basement accompanying Neil Young records. At the age of eighteen, Coulter traded his electric guitar for a classical guitar after attending a concert by noted classical guitarist Andrés Segovia.

After graduating high school, Coulter performed with several bands. In 1980, he moved to Santa Cruz, California, where he studied classical guitar and earned a bachelor of arts degree from the University of California-Santa Cruz. He went on to earn a master's degree in music from the San Francisco Conservatory of Music. Deeply interested in American folk music as well as traditional Celtic music, he went on to earn a second master's degree from the University of California-Santa Cruz in Ethnomusicology.