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Al-Rasheed was born in Paris to a Saudi father and a Lebanese mother. Her father descends from the Rashidi dynasty. Shortly after her birth, the family moved to Saudi Arabia, where al-Rasheed grew up.
In 1975, King Faisal of Saudi Arabia was assassinated by his nephew, Faisal bin Musaid. His mother was a sister of al-Rasheed's father, and the Saudi government accused the Rashidi family of being behind the assassination. Further investigation found this to be untrue, but in 1975, al-Rasheed's family moved to Lebanon, where al-Rasheed finished her baccalaureate in 1981. She then started her studies in anthropology and sociology at the American University of Beirut.
In 2005, after an appearance on Al Jazeera TV criticizing the Saudi government, Salman of Saudi Arabia, at the time the governor of Riyadh province, who later became king of Saudia Arabia, telephoned al-Rasheed's father, claiming that her Saudi citizenship was withdrawn as punishment for her television appearance.