Moulder was born 11 June 1959 in Boston, Lincolnshire and educated at Boston Grammar School. From an early age, he had an interest in music, listing among his favourite artists Cream and The Beatles. The first album he bought was Electric Warrior by T. Rex, and he was impressed by the quality of that album's recording. He joined his first band as a teenager and recorded a demo in a local studio; it was there that he realised that it had been the production that he had so enjoyed on Electric Warrior, and discovered that he was more interested in music engineering than performing.
Moulder's musical career started in the early 1980s, at Trident Studios in London. As an assistant engineer, he worked with influential producers like Jean Michel Jarre, drawing from them great familiarity with electronic sounds and textures. Also an engineer at Trident was Flood with whom Moulder would often collaborate in the future. Moulder assisted in one of Flood's recording sessions with The Jesus and Mary Chain, and found that the often fractious and troublesome band enjoyed working with him. The Mary Chain invited Moulder to engineer their live sounds and, eventually, to engineer their 1989 album Automatic. The album's production was praised for its combination of thick, noisy guitar with a polished, listener-friendly tone, and the Mary Chain's former label, Creation Records, soon had Moulder producing records for Ride, My Bloody Valentine and Swervedriver.