Tokai Teio was sired by triple crown winner Symboli Rudolf. Tokai Teio's dam was Tokai Natural, the half sister of Yushun Himba winner Tokai Roman. Because Natural had foot problems, she could not debut and became a brood mare. Natural and Roman's owner Masanori Uchimura had obtained the breeding right to Symboli Rudolf and originally planned to breed him with Roman. However, Roman, who was supposed to retire after the Niigata Daishoten, placed second, and it was decided that she would race for one more year.[2] Natural was bred with Rudolf instead.[3][lower-alpha 1]
Tokai Natural gave birth on April 20, 1988, at the Nagahama Ranch in Niikappu, Hokkaido. Immediately after birth, the foal was referred to as「帝王」"Teio", meaning monarch, referring to his sire Symboli Rudolf's nickname「皇帝」"Koutei", meaning emperor.[6] Thus, the foal was named Hamano Teio.[7] Teio had long legs and a delicate frame and did not receive high valuations.[3] However, once he started exercising, his flexible movement became apparent, garnering expectations.[3] In October the following year, Teio was transferred to the Nibutani Training Center in Biratori, Hokkaido where his flexibility and competitive spirit was highly received.[8] Teio would remain at Nibutani for an entire year until reaching the racing age of 3 years in October, 1990, after which he entered the Rittō Training Center in Rittō, Shiga under trainer Shoichi Matsumoto. Teio's racing name was registered as Tokai Teio.
During training, Tokai Teio was outstanding on the ramp course where horses with long strides are not supposed to record good times, giving Matsumoto high expectations.[9] Believing Teio to have a chance in the Japanese Triple Crown, Matsumoto back-calculated from the Satsuki Shō and Tokyo Yūshun and planned a schedule with leeway.[3] Furthermore, Teio's farrier was surprised at the flexibility of his joints,[lower-alpha 2] saying to his groom that "the derby horse has arrived".[10]