She was brought to Fuyuki from the Einzbern castle and raised as a normal child along with her adopted brother, Shirou.
They remained within her as a separate personality, Kuro, that continued to accrue the same memories as her. They decided when Illya was eight months old, and sealed her magical abilities and her memories up until that point. Her parents, Kiritsugu and Irisviel, had been discussing completely abandoning the ritual and the Einzbern family, and Irisviel was given the final choice. She was given the knowledge needed at birth as a result.
She was born directly to be utilized in the fourth Fuyuki Holy Grail War. Illya differs from her Fate/stay night counterpart in many different ways.