Lyadov was born in St. Petersburg into a family of eminent Russian musicians. He was taught informally by his conductor father Konstantin Lyadov from 1860 to 1868, and then in 1870 entered the St. Petersburg Conservatory to study piano and violin.
He soon gave up instrumental study to concentrate on counterpoint and fugue, although he remained a fine pianist. His natural musical talent was highly thought of by, among others, Modest Mussorgsky, and during the 1870s he became associated with the group of composers known as The Mighty Handful. He entered the composition classes of Nikolai Rimsky-Korsakov, but was expelled for absenteeism in 1876. In 1878 he was readmitted to these classes to help him complete his graduation composition.