He was born into an influential feudal Muslim – Nausherwani family in Karnal, Eastern Punjab on 1 October 1895. Ali Khan was educated at the Aligarh Muslim University in India, and then at Oxford University in the United Kingdom. Well-educated, he was a democratic political theorist who promoted parliamentarism in India. After first being invited by the Congress Party, he opted for the Muslim League led by influential Mohammad Ali Jinnah who was advocating the eradication of the injustices and ill-treatment meted out to Indian Muslims by the British government. He pursued his role in the independence movements of India and Pakistan, while serving as the first Finance Minister in the interim government of British Indian Empire, prior to the independence and partition of India and Pakistan in 1947. Ali Khan assisted Jinnah in campaigning for the creation of a separate state for Indian Muslims.
Ali Khan's credentials secured him the appointment of Pakistan's first Prime Minister, Ali Khan's foreign policy sided with the United States and the West, though his foreign policy was determined to be a part of the Non Aligned Movement. Facing internal political unrest, his government survived a coup hatched by the leftists and communists. Nonetheless, his influence grew further after Jinnah's death, and he was responsible for promulgating the Objectives Resolution. In 1951, at a political rally in Rawalpindi, Ali Khan was assassinated by a hired assassin, Said Babrak.
Liaquat Ali Khan was into an aristocrat Nausherwani family in Karnal, Punjab in India on 1 October 1895.:71:183 His family roots were described as either the Persian or the Punjabi Pathan:183 descent, according to various of his autobiographical sources, while other English biographical data noted that his family had originally emigrated from Iran to India about 500 years ago.:540
His father, Nawab Rustam Ali Khan, possessed the titles of Rukun-al-Daulah, Shamsher Jang and Nawab Bahadur, by the local population and the British Government who had wide respect for his family. The Ali Khan family was one of the few landlords whose property (300 villages in total including the jagir of 60 villages in Karnal) expanded across both eastern Punjab and Muzaffarnagar the United Provinces. Both of his parents, Nawab Rustam Ali Khan and Mahmoodah Begum are buried at their princely family compound located outside Karnal, Haryana, India. Liaquat Ali Khan’s former personal residence is located at Jansath Tehsil of Muzaffarnagar, Uttar Pradesh about 80km from his ancestral estate and is now being considered by the Uttar Pradesh government to be opened as a tourist destination. The family owned pre-eminence to timely support given by Liaqat's grandfather Nawab Ahmed Ali Khan of Karnal to British army during 1857 rebellion.(source-Lepel Griffin's Punjab Chiefs Volume One). Liaquat Ali Khan's mother, Mahmoodah Begum, arranged for his lessons in the Qur'an and Ahadith at home before his formal schooling started. His family had strong ties with the British Government, and the senior British government officers were usually visited at his big and wide mansion at their time of visit.
His family had deep respect for the Indian Muslim thinker and philosopher Syed Ahmad Khan, and his father had a desire for the young Liaqat Ali Khan to beeducated in the British educational system; therefore, his family sent Ali Khan to the famous Aligarh Muslim University (AMU), where he obtained degrees in law and political science.