Ali was born and raised in Lahore. The city was part of British India at the time of his birth in 1943, but became part of the newly independent nation of Pakistan four years later. He is the son of journalist Mazhar Ali Khan and activist mother Tahira Mazhar Ali Khan (daughter of Sir Sikandar Hyat Khan who led the Unionist Muslim League and was later Prime Minister of the Punjab in 1937).

Ali's parents "both came from a very old, crusty, feudal family". His father had broken with the family's conventions in politics when he was a student, adopting communism and atheism. Ali's mother also belonged to the same family, and became radicalized upon meeting his father. However, Ali was taught the fundamentals of Islam in order to be able to argue against it.

Emerging activism

While studying at the Punjab University, he organized demonstrations against Pakistan's military dictatorship. Ali's uncle was chief of Pakistan's Military Intelligence. His parents sent him to England to study at Exeter College, Oxford, where he studied Philosophy, Politics, and Economics. He was elected President of the Oxford Union, in 1965.

His public profile began to grow during the Vietnam War, when he engaged in debates against the war with such figures as Henry Kissinger and Michael Stewart. He testified at the Russell Tribunal over US involvement in Vietnam. As time passed, Ali became increasingly critical of American and Israeli foreign policies, and emerged as a figurehead for critics of American foreign policy across the globe. He was also a vigorous opponent of American relations with Pakistan that tended to back military dictatorships over democracy. He led an infamous march on an American embassy in London in 1968.

Active in the New Left of the 1960s, he has long been associated with the New Left Review. Drawn into revolutionary socialist politics through his involvement with The Black Dwarf newspaper, he joined a Trotskyist party, the International Marxist Group (IMG) in 1968. He was recruited to the leadership of the IMG and became a member of the International Executive Committee of the (reunified) Fourth International. He also befriended influential figures such as Malcolm X, Stokely Carmichael, John Lennon, and Yoko Ono.

In 1967 Ali was in Camiri, Bolivia, not far from where Che Guevara was captured, to observe the trial of Regis Debray. He was accused of being a Cuban revolutionary by authorities. Ali then said "If you torture me the whole night and I can speak Spanish in the morning I'll be grateful to you for the rest of my life."

During this period he was an IMG candidate in Sheffield Attercliffe at the February 1974 UK general election and was co-author of Trotsky for Beginners, a cartoon book. In 1981, the IMG dissolved when its members entered the Labour Party: the IMG was promptly proscribed. Ali then abandoned activism in the revolutionary left and supported Tony Benn in his bid to become deputy leader of the Labour Party that year.

In 1990, he published the satire Redemption, on the inability of the Trotskyists to handle the downfall of the Eastern bloc. The book contains parodies of many well-known figures in the Trotskyist movement.

His book Bush in Babylon criticizes the 2003 invasion of Iraq by American president George W. Bush. This book has a unique style, using poetry and critical essays in portraying the war in Iraq as a failure. Ali believes that the new Iraqi government will fail.

His previous book, Clash of Fundamentalisms, puts the events of the September 11 attacks in historical perspective, covering the history of Islam from its foundations.

Ali has remained a critic of modern neoliberal economics and was present at the 2005 World Social Forum in Porto Alegre, Brazil where he was one of 19 to sign the Porto Alegre Manifesto. He is a fan of the Bolivarian Revolution in Venezuela.

He has been described as "the alleged inspiration" for the Rolling Stones' song "Street Fighting Man", recorded in 1968. John Lennon's "Power to the People" was inspired by an interview Lennon gave to Ali.

In an article published in CounterPunch, he responded to the Pope Benedict XVI Islam controversy and said, "The Bavarian is a razor-sharp reactionary cleric. I think he knew what he was saying and why. In a neo-liberal world suffering from environmental degradation, poverty, hunger, repression, a ‘planet of slums’ (in the graphic phrase of Mike Davis), the Pope chooses to insult the founder of a rival faith. The reaction in the Muslim world was predictable, but depressingly insufficient."

Tariq Ali's The Leopard and The Fox, first written as a BBC screenplay in 1985, is about the last days of Zulfiqar Ali Bhutto. Never previously produced because of a censorship controversy, it was finally premiered in New York in October 2007, the day before former Pakistani Prime Minister Benazir Bhutto returned to her home country after eight years in exile.

in 2009, Ali, alongside Mark Weisbrot wrote the screenplay to the Oliver Stone documentary South of the Border.

He currently lives in Highgate, London with his partner Susan Watkins, editor of the New Left Review. He has three children: Natasha, Chengiz, and Aisha.