Paul E. Johnson was born on October 8, 1909 in Denver, Colorado, the son of Swedish immigrants Henning and Elin Johnson. There were two other boys in the family - Arnold and Gordon. After living in Iowa during Paul's early years, the family settled in Chicago, Illinois in 1923. Paul attended public school there and graduated from high school in 1928. He worked for a while as a manual training instructor for the Chicago Schools System. In 1930, he went to work for the tool and die department of Pullman and worked there sporadically for the next nine years. During these Depression years, he had part time jobs at various other garages and machine shops. He also took classes at Lewis University and Moody Bible Institute. After many years of courtship, he married Dolores Youngberg in 1937. They eventually had three children - Keith, Kent, and Linda.

As a child and young man he attended the Mission Covenant Church of Grant Crossing with his family and committed his life to Christ there at a revival service in 1930. He became active in many types of Christian outreach including visiting prisoners in the Cook County Jail and the state prisons, and playing his trombone for services at the Pacific Garden Mission and the Chicago Gospel Tabernacle and other churches.

In 1939 Paul became a full time salesman for the OK Tool Company, responsible for Illinois and Wisconsin. He became the Indianapolis representative of the company in 1941 and moved to that city with his family. While there, he became deeply involved in the evangelistic work of the Christian Businessmen's Committee and was one of the early supporters of the Youth for Christ organization started by Roger Malsbary. In 1946 the OK Tool Company was sold. Johnson worked for the new owners for a brief time, but in 1947 he moved to Wheaton, Illinois, where he managed the Manufacturers Tools Service Company, in which he had a half interest. He sold the company in 1979 and served as a manufacturers representative for the Apex Tool and Cutter Company. While living in Wheaton, he participated in the founding of the Wheaton Evangelical Free Church and the Wheaton Grammar School.