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Kiran is daughter of Prakash Lal Peshawaria and Prem Lata Peshawaria. she has 3 sisters- Shashi, Reeta and Anu. Her parents had a vision ahead of their time and were in no way conventional in the upbringing of their daughters. All daughters moved on to excel in their chosen vocations. Shashi in the field of philosophy and art, Kiran in uniformed services, Reeta in the field of psychology and Anu in law while having also played at the Wimbledon, Asian Games and the Universiad where she represented India.

Kiran did her schooling from the Sacred Heart Convent School in Amritsar. She completed her graduation in the English language from the Government College for Women in Amritsar. She received her Masters degree in Political Science from Punjab University, Chandigarh. She continued her studies, even when she joined the Indian Police force. In the year 1988, she obtained a degree in Law (LLB) from Delhi University.

In the year 1993, the Department of Social Sciences, the Indian Institute of Technology in New Delhi awarded her with a Ph.D. degree. Her topic of research was Drug Abuse and Domestic Violence. Kiran Bedi has won the championship of all-India and all-Asian tennis competition. When she was 22 years old, she won the Asian Ladies Title.

Kiran met her husband Brij Bedi on the tennis court.He was a University tennis player, a former farmer and a textile engineer by profession. He is a renowned social activist in Amritsar. He is known in the city for education of children of drug addicts. They have a daughter, Saina who is also involved in community service. She along with her husband Ruzbeh N. Bharucha, is producing short films and documentaries. Ruzbeh is a journalist by profession. He is an author of five books to date and his latest book and film Yamuna.