Sayle was born and raised in Anfield, Liverpool, the son of Molly, a pools clerk, and Joe, a railway worker, screenonline: Sayle, Alexei (1952-) Biography both of whom were members of the Communist Party of Great Britain. Sayle's mother was of Lithuanian Jewish descent and his father was English. In the aftermath of the May 1968 French uprising, he joined the Communist Party of Britain . He went to The Alsop High School in Walton. After leaving school, Sayle took a foundation course in art at Southport, before attending Chelsea College of Art and Design in London. He has been married to Linda Rawsthorn since 1974.

On 3 January 2009, Sayle took part in a protest in London along with thousands of others in opposition to Israel's ground attack on Gaza.

When The Comedy Store opened in London in 1979, Sayle responded to an advert for would-be comedians and became its first master of ceremonies. In 1980, comedy producer Martin Lewis saw Sayle perform at the Edinburgh Festival Fringe and became his manager. Sayle became the leading performer at The Comic Strip and in 1981 he made a radio series for London's Capital Radio, Alexei Sayle And The Fish People, for which he won a Sony Radio Award. Sayle later released an album based on the show - The Fish People Tapes. He appeared on The Comic Strip Album (1981) and recorded Cak! (1982). He also appeared in the stage show, film and comedy album of The Secret Policeman's Other Ball (1981-82). In 1982, Sayle joined Central Television's late-night alternative cabaret show O.T.T. He left nine weeks into the show's run to tour Australia with The Comic Strip.

Sayle played various roles in the situation comedy The Young Ones along with Adrian Edmondson, Rik Mayall, Nigel Planer and Christopher Ryan. He often portrayed the students' landlord Mr. Balowski, as well as other Balowski family members. In the episode titled Oil, he performs a song called "Doctor Martens Boots".

The single "'Ullo John! Gotta New Motor?" achieved Top 20 chart success in the UK in 1984. Produced by Clive Langer and Alan Winstanley (who also produced for Madness and Elvis Costello), the record in its 12-inch version achieved notoriety owing to its extensive use of profane language. After this, Sayle starred in many television series and films, and became one of the UK's highest paid voice-over artists. He released two more singles: "Didn't You Kill My Brother?", which was accompanied by a popular music video, and "Meanwhile", both from the album Panic, the cover of which parodies the cover of the Michael Jackson album Off The Wall. Didn't You Kill My Brother? was also the name of an episode of The Comic Strip Presents..., which Sayle co-wrote and starred in.

In 1985, he appeared in the Doctor Who serial Revelation of the Daleks. In a column for a British tabloid newspaper around the same time, he indicated that he wanted to become the "first Socialist Doctor." In 1988, Sayle played the role of Trinculo in Shakespeare's The Tempest, directed by Jonathan Miller at The Old Vic theatre in London.

Sayle has co-written many other programmes, including three series of Alexei Sayle's Stuff (1988-91), two series of The All New Alexei Sayle Show (1994-95) and one series of Alexei Sayle's Merry-Go-Round (1998). In 1989, Sayle was awarded an International Emmy for Stuff. In conversation with Mark Thomas on BBC Radio 4's informal chat-show Chain Reaction, Sayle revealed that the first he knew of the award was when he watched Channel 4 News and saw, to his amazement, Benny Hill collecting the award on his behalf. Sayle alternates his comedic work with performances as a character actor ranging from serious (Gorky Park, 1983) to humorous (Indiana Jones and the Last Crusade, 1989). He has also provided the voice-over for animations including the character Rubbish the Cat in the children's TV series Rubbish, King of the Jumble (1992-94).

Sayle starred in the 1992 Carry On film, Carry On Columbus along with various modern comedians including Comic Strip founder Peter Richardson, as well as members of the original Carry On team. In 1994 he presented the miniseries Drive, which gave advice for safe driving through Sayle's signature form of humour interspersed with serious pieces. In 1995, he was awarded an honorary professorship at Thames Valley University.

On 3 November 2006 he presented Chopwell Soviet, a 30-minute programme on BBC Radio 4 that reviewed the Chopwell miners 80 years after the village of Chopwell became known as Little Moscow. BBC - Radio 4 - History - Chopwell Soviet

In 2008, he wrote and presented Alexei Sayle's Liverpool, a three-part television series in which he reconnected with his hometown. He stated in the programmes that on first hearing that Liverpool was to be awarded the European Capital of Culture, he received much criticism for describing the city as "philistine". He now feels that he does not know whether or not his original statement was true, but as a result of making the series he does now consider Liverpool to be his home, and he has vowed to go back there more often in the future.

Sayle has written two short story collections and five novels, including a graphic novel, as well as columns for various publications. His book Great Bus Journeys Of The World, co-written with David Stafford, is mostly a collection of his columns for Time Out and the Sunday Mirror. He was one of eight contributory authors to the BBC Three competition End Of Story, in which members of the public completed the second half of stories written by established authors. The winning entry to Sayle's story, Imitating Katherine Walker, was written by freelance writer Arthur Allan. Sayle's 'satirical memoir' focusing on his early life was published in 2010.