Graduating from Oakland Technical High School in 1966, Milani earned his B.A. in political science and economics from the University of California, Berkeley in 1970 and his Ph.D. in political science from the University of Hawaii in 1974.

Upon completing his Ph.D., Milani returned to Iran, where he was an assistant professor of political science at the National University of Iran from 1975 to 1977, when he was jailed for a year as a political prisoner. He was a research fellow at the Iranian Center for Social Research from 1977 to 1978. He was also an assistant professor of law and political science at the University of Tehran and a member of the board of directors of Tehran University's Center for International Studies from 1979 to 1986 when he left Iran for the United States.

After returning to the United States, Milani was appointed Professor of History and Political Science and Chair of the Department at Notre Dame de Namur University and a research fellow at the Institute of International Studies at the University of California, Berkeley. Milani became a Hoover Institution Research Fellow in 2001 and left Notre Dame de Namur for Stanford in 2002.

He is currently the Hamid and Christian Moghadam Director of Iranian Studies at Stanford.