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Also known as Dot or Dottie, Parker was born Dorothy Rothschild to Jacob Henry and Eliza Annie Rothschild (née Marston) at 732 Ocean Avenue in the West End village of Long Branch, New Jersey, where her parents had a summer beach cottage. Dorothy's mother was of Scottish descent, and her father was of German-Jewish descent.
Her mother died in West End in July 1898, when Parker was a month shy of turning five. Her father remarried, in 1900, a woman named Eleanor Francis Lewis. Parker detested her father and stepmother, accusing her father of being physically abusive and refusing to call Eleanor either "mother" or "stepmother," instead referring to her as "the housekeeper."She grew up on the Upper West Side, and attended Roman Catholic elementary school at the Convent of the Blessed Sacrament, despite having a Jewish father and Protestant stepmother. She was asked to leave following her characterization of the Immaculate Conception as "spontaneous combustion." Her stepmother died in 1903, when Parker was nine. Parker later went to Miss Dana's School, a finishing school in Morristown, New Jersey. Her formal education ended when she was 13. Her father died in 1913. Following his death, she played piano at a dancing school to earn a living while she worked on her verse.
She sold her first poem to Vanity Fair in 1914 and some months later, she was hired as an editorial assistant for another Condé Nast magazine, Vogue. She moved to Vanity Fair as a staff writer following two years at Vogue. In 1917 she married Edwin Pond Parker II a Wall Street Stock broker,but they were separated by his army service in World War I.
Parker gained sucess in 1919 writing theatre critism for Vanity Fair,which she began in 1918 as a stand-in for the vacationing P. G. Wodehouse. At the magazine she met Robert Benchley, and Robert E. Sherwood. The trio began lunching at the Algonquin Hotel, and became the founding members of the Algonquin Round Table, a group which lasted for 10 years (1919-1929).In 1934, she married Alan Campbell, an actor with aspirations of being a screenwriter. For sometime the both worked together on screenplays, but Paker did work on her own. Parker was also put on the Hollywood Blacklist, due to her becoming a more vocal advocate for left-wing causes.