Arquette was born in New York City. His father was actor Lewis Arquette, and his grandfather was comedian Cliff Arquette, remembered for his "Charley Weaver" character, a fixture on the original Hollywood Squares. His mother, Brenda "Mardi" Nowak, was a pin-up girl and actress who appeared in such films as Olga's House of Shame. Arquette's mother was Jewish, the daughter of a Holocaust refugee from Poland, while his father was a convert to Islam and a descendant of explorer Meriwether Lewis. Arquette's siblings Patricia, Rosanna, Alexis and David are all actors.

He is the brother-in-law of actress Courteney Cox and actor Thomas Jane.