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Penn was born in Los Angeles County, California, the son of Leo Penn, an actor and director, and Eileen Ryan (nee Annucci), an actress. He has one living brother, musician Michael Penn. Another brother, actor Chris Penn, died in 2006. His paternal grandparents were Jewish immigrants from Lithuania and Russia. Penn's mother is a Roman Catholic of Italian and Irish descent. According to Penn's mother, Leo Penn may have had distant Spanish ancestry, as the family's surname was originally "Pinon". Penn was raised in a secular home and is an Agnostic.

Penn appeared in a 1974 episode of Little House on the Prairie as a then blonde-haired extra because his father, Leo, directed some of the episodes. Penn launched his career with the 1981 film Taps, followed a year later with the comedy Fast Times at Ridgemont High (in the role of Jeff Spicoli), and has since starred in over forty movies. In 1983, Penn turned in one of his best early performance as Mick O'Brien, a troubled youth in the drama Bad Boys. It earned Penn favorable reviews and jump started his career as a serious actor.

In 1985, Penn gave a memorable performance in the role of Andrew Daulton Lee in The Falcon and the Snowman. Lee was a former drug dealer by trade, convicted of espionage for the Soviet Union and was originally sentenced to life in prison. Lee was paroled in 1998. According to an April 8, 2005, interview in The Guardian, Penn later hired Lee as his personal assistant, partly because he wanted to reward Lee for allowing him to play Lee in the film, and also because he was a firm believer in rehabilitation and thought Andrew Lee should be reintegrated into society now that he is a free man again.

In 1986 he starred in the drama At Close Range, opposite Christopher Walken. The film was based on a true story and gained positive reviews from critics. Fans and critics noticed the change in Penn's body build. Penn appeared very muscular and in shape. It's considered to be the first film to cash in on Penn's status as a sex symbol. The film featured his then wife Madonna's single "Live to Tell". The music video for the song featured clips from the movie. The video played heavily on MTV and the music video helped promote the film.

In April 1987, during the production of Colors, Sean Penn was arrested for punching a photographer who was taking pictures of him without permission. He served a month in jail for the assault.

In 1991, Penn made his directorial debut with The Indian Runner, a film based on Bruce Springsteen's song "Highway Patrolman" from the Nebraska album. He also directed music videos, such as: Shania Twain's "Dance with the One That Brought You" in 1993 and Peter Gabriel's "The Barry Williams Show" in 2002. He also appeared on an episode of Viva La Bam in 2004 with his son, Hopper. He has since directed three more films: The Crossing Guard in 1995, The Pledge in 2001, and the critically acclaimed Into the Wild in 2007.

Penn will star in Gus Van Sant's bio-pic Milk, as real life gay rights icon Harvey Milk; the film is scheduled for a late 2008 release.

Penn was supposedly engaged to actress Elizabeth McGovern, his co-star in 1984's Racing with the Moon, after which he dated Susan Sarandon. Penn's personal life began to attract media attention when he married pop star Madonna in 1985. The relationship was marred by violent outbursts against the press, including one incident for which he was arrested for beating a photographer. It is also suggested that when Penn discovered the paparazzo in his hotel room, he hung him by his ankles from the ninth-floor balcony. Madonna dedicated her third studio album, True Blue to Penn, referring to him in the liner notes as "the coolest guy in the universe". Later in the marriage, Penn was charged with felony domestic assault, a charge for which he pleaded to a misdemeanor. Penn and Madonna divorced in 1989.

He soon began a relationship with Robin Wright, and their first child, Dylan Frances, was born in 1991. Their second child, Hopper Jack, was born in 1993. Penn and Wright married in 1996 and lived in Ross, California. On December 27, 2007, the couple's representative announced that the Penns were divorcing. However, on April 9, 2008, it was announced that the couple had ended their divorce proceedings.

During a separation from Wright in the mid 1990s, Penn dated singer and songwriter Jewel. He was also the director of the original video for Jewel's hit song "You Were Meant for Me".

He is good friends with Metallica drummer Lars Ulrich and he introduced the band at their MTV Icon Induction Ceremony in 2003.

On April 10, 2003, Penn's 1987 Buick Grand National was stolen in Berkeley, California with two firearms in the trunk. Sean also has a 1968 Chevrolet El Camino.

Along with Johnny Depp, Mick Hucknall, and John Malkovich, Penn is a part-owner of the Parisian restaurant-bar Man Ray.

His younger brother, Chris, famous for playing "Nice Guy Eddie" in Reservoir Dogs, died from an enlarged heart (drug induced) in his Santa Monica condominium on January 24, 2006.

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