She is the daughter of Susan Murphy Dermody, a film theorist, Historian, and Director. Her father is a Psychologist. Dermody's family encouraged a love of literature and the arts, and supported performing as well - her mother gave Dermody her first part when she was 5 years old in the film her mother directed Breathing Under Water (1993). Dermody attended Mosman High School in Sydney with a near-perfect UAI (99.97). During high school she was active in drama classes, as well as the Australian Theatre for Young People, and furthered her acting education with several courses at the National Institute of Dramatic Art in Sydney.