Halaby was born in Dallas, Texas. His father was Najeeb Elias Halaby Sr. a SyrianChristian, who emigrated to the United States from Syria in 1891. Najeeb Elias Halaby Sr.'s father was a Elias Halaby, provincial treasurer or magistrate in Ottoman Syria, who also came to the U.S. in 1891. Najeeb Elias Halaby Sr. worked as an importer and later an oil broker. In the mid-1920s, Najeeb Elias Halaby Sr. opened Halaby Galleries, a rug boutique and interior-decorating shop, at Neiman Marcus in Dallas, and ran it with his wife. He died shortly afterward, and his estate was unable to continue the new enterprise.
Najeeb Elias Halaby Jr.'s mother was the former Laura Wilkins. Following her husband's death, she married Urban B. Koen, but they ultimately divorced. Halaby's maternal grandfather was John T. Wilkins, who served in the 7th Tennessee Cavalry during the Civil War.