His parents were Romanian-born Jewish immigrants. His parents moved to New York City and struggled to give him and his older brother Stan Lee a good life. Larry Lieber attended art school at the Pratt Institute in Brooklyn and at Manhattan's Art Students League. He then did military service with the U.S. Air Force for four years.

In the early 1960s, Lieber scripted several Marvel Comics stories plotted by his brother, Stan Lee. Lieber scripting credits included early appearances of superheroes including Thor in Journey into Mystery, Iron Man in Tales of Suspense, and Ant-Man in Tales to Astonish. Lieber went on to script stories in western titles such as Rawhide Kid.In 1974, Lieber left Marvel to take on an editorship at Atlas/Seaboard Comics, the term that comic book historians and collectors use to refer to the "Atlas Comics" line published by Seaboard Periodicals, to differentiate it from the 1950s Marvel Comics predecessor Atlas Comics. Marvel Comics founder and longtime publisher Martin Goodman had left Marvel in 1972, having sold the company in 1970, and launched this new company in June 1974 to go head-to-head with Marvel and DC Comics. He hired Lieber to be editor of the Atlas black-and-white comics-magazines, and additionally hired Warren Publishing veteran Jeff Rovin to edit the color comic-book line, which soon fell under Lieber's editorship.

As Lieber, in a 1999 interview, described his experience as editor:

"When I went there, Martin put out two kinds of books. He was putting out color comics, and he was also going to put out black-and-white comics like Warren and Marvel. Now, I knew nothing about black-and-white comics, right? My only experience was in the color comics. Jeff Rovin came from Warren, and he knew nothing about color comics. Martin unfortunately put Jeff in charge of all the color comics and put me in charge of the black-and-white books. It was an unfortunate thing, and basically what happened was that Jeff's books didn't turn out so well. . . . Martin had to pay high freelance rates, because otherwise nobody would work for a new and unproven company. . . . It didn't work out too well, and Jeff finally left angrily or something, and I had to take over all his books. At this point, business was bad, and I tried to do what I could. One of the things I had to do was to cut rates and tell people they were going to make less money, which was not an enviable position".