Dixon was raised in the Ashburton neighborhood of West Baltimore. Her parents were Philip Dixon, Sr., and Winona Dixon. Her father was a car salesman, and her mother was a community activist, active in her church, political causes, and member of local community groups. Sheila Dixon completed her schooling in Baltimore City public schools, and she completed her graduation in Northwestern High School. She got a bachelor’s degree from Towson University and a master’s degree from Johns Hopkins University.

She got divorced twice. Dixon has two children, Jasmine and Joshua. Professional basketball player Juan Dixon is the nephew of Juan Dixon. He was the University of Maryland to the 2002 NCAA championship. She has a lifelong resident in the City of Baltimore. Dixon is a member of the Mayors Against Illegal Guns Coalition, an organization formed in 2006 and co-chaired by New York City mayor Michael Bloomberg and Boston mayor Thomas Menino.