According to the Jain account, Chanakya was born to two lay Jains (shravaka) named Chanin and Chaneshvari. His birthplace was the Chanaka village in Golla vishaya (region). The identity of "Golla" is not certain, but Hemachandra states that Chanakya was a Dramila, implying that he was a native of South India.[24]
Chanakya was born with a full set of teeth. According to the monks, this was a sign that he would become a king in the future. Chanin did not want his son to become haughty, so he broke Chanakya's teeth. The monks prophesied that the baby would go on to become a power behind the throne. Chanakya grew up to be a learned shravaka, and married a Brahmin woman. Her relatives mocked her for being married to a poor man. This motivated Chanakya to visit Pataliputra, and seek donations from the king Nanda, who was famous for his generosity towards Brahmins. While waiting for the king at the royal court, Chanakya sat on the king's throne. A dasi (servant girl) courteously offered Chanakya the next seat, but Chanakya kept his kamandal (water pot) on it, while remaining seated on the throne. The servant offered him a choice of four more seats, but each time, he kept his various items on the seats, refusing to budge from the throne. Finally, the annoyed servant kicked him off the throne. Enraged, Chanakya vowed to uproot Nanda and his entire establishment, like "a great wind uproots a tree".
Chanakya knew that he was prophesied to become a power behind the throne. So, he started searching for a person worthy of being a king. While wandering, he did a favour for the pregnant daughter of a village chief, on the condition that her child would belong to him. Chandragupta was born to this lady. When Chandragupta grew up, Chanakya came to his village and saw him playing "king" among a group of boys. To test him, Chanakya asked him for a donation. The boy told Chanakya to take the cows nearby, declaring that nobody would disobey his order. This display of power convinced Chanakya that Chandragupta was the one worthy of being a king.
Chanakya took Chandragupta to conquer Pataliputra, the capital of Nanda. He assembled an army using the wealth he had acquired through alchemy (dhatuvada-visaradan). The army suffered a severe defeat, forcing Chanakya and Chandragupta to flee the battlefield. They reached a lake while being pursued by an enemy officer. Chanakya asked Chandragupta to jump into the lake, and disguised himself as a meditating ascetic. When the enemy soldier reached the lake, he asked the 'ascetic' if he had seen Chandragupta. Chanakya pointed at the lake. As the soldier removed his armour to jump into the lake, Chanakya took his sword and killed him. When Chandragupta came out of the water, Chanakya asked him, "What went through your mind, when I disclosed your location to the enemy?" Chandragupta replied that he trusted his master to make the best decision. This convinced Chanakya that Chandragupta would remain under his influence even after becoming the king. On another occasion, Chanakya similarly escaped the enemy by chasing away a washerman, and disguising himself as one. Once, he cut open the belly of a Brahmin who had just eaten food, and took out the food to feed a hungry Chandragupta.
One day, Chanakya and Chandragupta overheard a woman scolding her son. The child had burnt his finger by putting it in the middle of a bowl of hot gruel. The woman told her son that by not starting from the cooler edges, he was being foolish like Chanakya, who attacked the capital before conquering the bordering regions. Chanakya realized his mistake, and made a new plan to defeat Nanda. He formed an alliance with Parvataka, the king of a mountain kingdom called Himavatkuta, offering him half of Nanda's kingdom.