Merrell was born in Auburn, New York, on 7 September 1846, the son of John Camp Merrell and the former Jane A. Allen. He entered the United States Naval Academy on 20 July 1863, graduating in June 1867. Merrell's first assignment was to the European Station from 1867 to 1870. While there, he served aboard the screw sloop-of-war USS Ticonderoga from 1867 to 1868, was promoted to ensign on 18 December 1868, and served aboard the screw sloop-of-war USS Plymouth from 1869 to 1870.