Clarence G. Jackson was born on March 25, 1842, in Berwick, Pennsylvania. He was the youngest son of self-made railroad equipment manufacturer, M. W. Jackson and his first wife, Margaret Gearhart Jackson. He grew up in Berwick, and at the age of fourteen attended the Dickinson Seminary in Williamsport. Then he enrolled in Dickinson College in Carlisle, Pennsylvania, at the age of sixteen. He was elected to the Belles Lettres Society and graduated with honors with the class of 1860.

Jackson returned to Berwick to work with his father and study law, but after the outbreak of the Civil War in 1861, he enlisted in August 1862 as a second lieutenant in Company H of the Eighty-fourth Pennsylvania Volunteer Infantry. The newly raised regiment was organized at Camp Crossman, near Huntingdon, and went on to participate in some of the heaviest fighting of the war. Jackson was promoted to first lieutenant in January 1863 and was wounded and captured at the Battle of Chancellorsville on May 3, 1863. He was imprisoned at the infamous Libby Prison in Richmond before being exchanged.

Returning to the 84th, Jackson was promoted to the command of Company H. He was captured again at the Battle of the Wilderness and returned to Libby before being transferred to Charleston with 600 other officers allegedly to serve as "human shields" against the Union shelling of the city. He was once again exchanged and served until the end of the war in Company H which had been amalgamated with the Fifty-Seventh Pennsylvania in January 1865.

Jackson returned to Berwick and his father's business in 1865 but he remained involved in military affairs. He was appointed a major in the newly organized Pennsylvania National Guard in 1870. He was promoted to colonel on the governor's staff during Governor Hartranft's revamping of the Guard in the late 1870s, and ultimately was appointed quartermaster general in 1879. By that time he was vice-president in the Jackson and Woodin Manufacturing Company and a director of the First National Bank of Berwick. Jackson served as a school director in Berwick, a trustee of the local Methodist Episcopal church and a trustee of his alma mater from 1875-1880.