[1] Bhagyalakshmi was born in an Aristocratic Tamil Brahmin family to Shivaram Iyer and Rajamani Ammal in Chennai.
She has a younger brother Rohith Kumar, who is an engineer.
She studied at Sacred Heart Matriculation School, now known as Presentation Convent, at Church Park, until the 10th grade, after which she dropped out of school to pursue an acting career.
[2] She married film producer Vasudevan Mannadiyar, a Malayali from Gujarat involved in the garment business, on 14 April 2001.
After her marriage Bhagyalakshmi retired from acting in the film industry and settled in Gujarat for 14 years.