Born in Grand Rapids, Michigan, the son of Edna Phillips and stage star Taylor Holmes, Holmes enjoyed a privileged childhood and received his education at Trinity College, Cambridge, the University of Grenoble and a year at Princeton University where he was spotted in the undergraduate crowd during the filming of Frank Tuttle's Varsity in 1928 and offered a screen test. In the early 1930s he became a popular leading man, playing leads in a few important productions, notably in Josef von Sternberg's An American Tragedy (1931).