Ahmad Shah Massoud was born in 1953 in Bazarak, Panjshir, to a well-to-do family native to the Panjshir valley. His name at birth was "Ahmed Shah"; he took the name "Massoud" as a nom de guerre when he went into the resistance movement in 1974. His father, Dost Mohammad Khan, was a colonel in the Royal Afghan Army. From his native Panjshir, his family moved briefly to Herat and then to Kabul, where Massoud spent most of his childhood.

Massoud came from an ethnic Tajik, Sunni Muslim background in the Panjshir valley of northern Afghanistan. He began studying engineering at Polytechnical University of Kabul in the 1970s, where he became involved with religious anti-communist movements around Burhanuddin Rabbani, a leading Islamist. He was part of a failed coup against Mohammed Daoud Khan's government. He later joined Rabbani's Jamiat-e Islami party. During the Soviet–Afghan War, his role as a powerful mujahideen insurgent leader earned him the nickname of "Lion of Panjshir" (شیر پنجشیر) among his followers as he successfully resisted the Soviets from taking Panjshir Valley. In 1992 he signed the Peshawar Accord, a peace and power-sharing agreement, in the post-communist Islamic State of Afghanistan, and was so appointed as the Minister of Defense as well as the government's main military commander. His militia fought to defend the capital Kabul against militias led by Gulbuddin Hekmatyar and other Warlords who were bombing the city—and eventually the Taliban, who started to lay siege to the capital in January 1995 after the city had seen fierce fighting with at least 60,000 civilians were killed.

In 1973, Mohammed Daoud Khan was brought to power in a coup d'état backed by the People's Democratic Party of Afghanistan, and the Republic of Afghanistan was established. These developments gave rise to an Islamist movement opposed to the increasing communist and Soviet influence over Afghanistan. During that time, while studying at Kabul University, Massoud became involved with the Muslim Youth (Sazman-i Jawanan-i Musulman), the student branch of the Jamiat-e Islami (Islamic Society), whose chairman then was the professor Burhanuddin Rabbani. Kabul University was a centre for political debate and activism during that time.

Massoud had survived assassination attempts over a period of 26 years, including attempts made by al-Qaeda, the Taliban, the Pakistani ISI and before them the Soviet KGB, the Afghan communist KHAD and Hekmatyar. The first attempt on Massoud's life was carried out by Hekmatyar and two Pakistani ISI agents in 1975 when Massoud was 22 years old. In early 2001, al-Qaeda would-be assassins were captured by Massoud's forces while trying to enter his territory.

On April 27, 1978, the PDPA and military units loyal to it killed Daoud Khan, his immediate family, and Bodyguards in a violent coup, and seized control of the capital Kabul. The new PDPA government, led by a revolutionary council, did not enjoy the support of the masses. It announced and implemented a doctrine hostile to political dissent, whether inside or outside the party.

Following the 1979 Soviet invasion and occupation of Afghanistan, Massoud devised a strategic plan for expelling the invaders and overthrowing the communist regime. The first task was to establish a popularly based resistance force that had the loyalty of the people. The second phase was "active defense" of the Panjshir stronghold, while carrying out asymmetric warfare. In the third phase, the "strategic offensive", Massoud's forces would gain control of large parts of Northern Afghanistan. The fourth phase was the "general application" of Massoud's principles to the whole country, and the defeat of the Afghan communist government.

At that point Osama bin Laden, trying to mediate, urged Hekmatyar to "go back with your brothers" and to accept a compromise. Bin Laden reportedly "hated Ahmad Shah Massoud". Bin Laden was involved in ideological and personal disputes with Massoud and had sided with Gulbuddin Hekmatyar against Massoud in the inner-Afghan conflict since the late 1980s. But Hekmatyar refused to accept a compromise, confident that he would be able to gain sole power in Afghanistan.

Anthony Davis, who studied and observed Massoud's forces from 1981 to 2001, reported that during the observed period, there was "no pattern of repeated killings of enemy civilians or military prisoners" by Massoud's forces. Edward Girardet, who covered Afghanistan for over three decades, was also in Kabul during the war. He states that while Massoud was able to control most of his commanders well during the anti-Soviet and anti-Taliban resistance, he was not able to control every commander in Kabul. According to this and similar testimonies, this was due to a breakdown of law and order in Kabul and a war on multiple fronts, which they say, Massoud personally had done all in his power to prevent.

In 1983, the Soviets offered Massoud a temporary truce, which he accepted in order to rebuild his own forces and give the civilian population a break from Soviet attacks. He put the respite to good use. In this time he created the Shura-e Nazar (Supervisory Council), which subsequently united 130 commanders from 12 Afghan provinces in their fight against the Soviet army. This council existed outside the Peshawar parties, which were prone to internecine rivalry and bickering, and served to smooth out differences between resistance groups, due to political and ethnic divisions. It was the predecessor of what could have become a unified Islamic Afghan army.

With the defeat of the Soviet-Afghan attacks, Massoud carried out the next phase of his strategic plan, expanding the resistance movement and liberating the northern provinces of Afghanistan. In August 1986, he captured Farkhar in Takhar Province. In November 1986, his forces overran the headquarters of the government's 20th division at Nahrin in Baghlan Province, scoring an important victory for the resistance. This expansion was also carried out through diplomatic means, as more mujahideen commanders were persuaded to adopt the Panjshir military system.

Massoud was married to Sediqa Massoud. They have one son, Ahmad Massoud (born in 1989) and five daughters (Fatima born in 1992, Mariam born in 1993, Ayesha born in 1995, Zohra born in 1996 and Nasrine born in 1998). In 2005 Sediqa Massoud published a personal account on her life with Massoud (co-authored by two women's rights Activists and friends of Sediqa Massoud, Chékéba Hachemi and Marie-Francoise Colombani (fr)) called "Pour l'amour de Massoud" (For the love of Massoud), in which she describes a decent and loving husband.

With United Nations support, most Afghan political parties decided to appoint a legitimate national government to succeed communist rule, through an elite settlement. While the external Afghan party Leaders were residing in Peshawar, the military situation around Kabul involving the internal commanders was tense. A 1991 UN peace process brought about some negotiations, but the attempted elite settlement did not develop. In April 1992, resistance Leaders in Peshawar tried to negotiate a settlement. Massoud supported the Peshawar process of establishing a broad coalition government inclusive of all resistance parties, but Hekmatyar sought to become the sole ruler of Afghanistan, stating, "In our country coalition government is impossible because, this way or another, it is going to be weak and incapable of stabilizing the situation in Afghanistan."

On April 24, 1992, the Leaders in Peshawar agreed on and signed the Peshawar Accord, establishing the post-communist Islamic State of Afghanistan. The creation of the Islamic State was welcomed by the General Assembly of the United Nations and the Islamic State of Afghanistan was recognized as the legitimate entity representing Afghanistan until June 2002, when its successor, the Islamic Republic of Afghanistan, was established under the interim government of Hamid Karzai. Under the 1992 Peshawar Accord, the Defense Ministry was given to Massoud while the Prime Ministership was given to Hekmatyar. Hekmatyar refused to sign. With the exception of Hekmatyar's Hezb-e Islami, all of the other Peshawar resistance parties were unified under this peace and power-sharing accord in April 1992.

In May 1993, a new effort was made to reinstate the Islamabad Accord. In August, Massoud reached out to Hekmatyar in an attempt to broaden the government. By the end of 1993, however, Hekmatyar and the former communist general and militia leader, Abdul Rashid Dostum, were involved in secret negotiations encouraged by Pakistan's secret Inter-Services Intelligence, Iran's intelligence Service, and Uzbekistan's Karimov administration. They planned a coup to oust the Rabbani administration and to attack Massoud in his northern areas.

The Taliban's early victories in 1994 were followed by a series of defeats that resulted in heavy losses. The Taliban's first major offensive against the important western city of Herat, under the rule of Islamic state ally Ismail Khan, in February 1995 was defeated when Massoud airlifted 2,000 of his own core forces from Kabul to help defend Herat. Ahmed Rashid writes: "The Taliban had now been decisively pushed back on two fronts by the government and their political and military leadership was in disarray. Their image as potential peacemakers was badly dented, for in the eyes of many Afghans they had become nothing more than just another warlord party." International observers already speculated that the Taliban as a country-wide organization might have "run its course".

Mullah Omar, however, consolidated his control of the Taliban and with foreign help rebuilt and re-equipped his forces. Pakistan increased its support to the Taliban. Its military advisers oversaw the restructuring of Taliban forces. The country provided armored pick-up trucks and other military equipment. Saudi Arabia provided the funding. Furthermore, there was a massive influx of 25,000 new Taliban fighters, many of them recruited in Pakistan. This enabled the Taliban to capture Herat to the west of Kabul in a surprise attack against the forces of Ismail Khan in September 1995. A nearly one-year siege and bombardment campaign against Kabul, however, was again defeated by Massoud's forces.

Life in the areas under direct control of Massoud was different from the life in the areas under Taliban or Dostum's control. In contrast to the time of chaos in which all structures had collapsed in Kabul, Massoud was able to control most of the troops under his direct command well during the period starting in late 1996. Massoud always controlled the Panjshir, Takhar, parts of Parwan and Badakhshan during the war. Some other provinces (notably Kunduz, Baghlan, Nuristan and the north of Kabul) were captured by his forces from the Taliban and lost again from time to time as the frontlines varied.

Massoud was the only chief Afghan leader who never left Afghanistan in the fight against the Soviet Union and later in the fight against the Taliban Emirate. In the areas under his direct control, such as Panjshir, some parts of Parwan and Takhar, Massoud established democratic institutions. One refugee who cramped his family of 27 into an old jeep to flee from the Taliban to the area of Massoud described Massoud's territory in 1997 as "the last tolerant corner of Afghanistan".

In the meantime, the only collaboration between Massoud and another U.S. intelligence Service, the Central Intelligence Agency (CIA), consisted of an effort to trace Osama bin Laden following the 1998 embassy bombings. The U.S. and the European Union provided no support to Massoud for the fight against the Taliban.

From 1999 onwards, a renewed process was set into motion by the Tajik Ahmad Shah Massoud and the Pashtun Abdul Haq to unite all the ethnicities of Afghanistan. Massoud united the Tajiks, Hazara and Uzbeks as well as several Pashtun commanders under his United Front. Besides meeting with Pashtun tribal Leaders and acting as a point of reference, Abdul Haq received increasing numbers of Pashtun Taliban themselves who were secretly approaching him. Some commanders who had worked for the Taliban military apparatus agreed to the plan to topple the Taliban regime as the Taliban lost support even among the Pashtuns. Senior diplomat and Afghanistan expert Peter Tomsen wrote that "[t]he ‘Lion of Kabul’ [Abdul Haq] and the ‘Lion of Panjshir’ [Ahmad Shah Massoud] would make a formidable anti-Taliban team if they combined forces. Haq, Massoud, and Karzai, Afghanistan’s three leading moderates, could transcend the Pashtun—non-Pashtun, north-south divide." Steve Coll referred to this plan as a "grand Pashtun-Tajik alliance". The senior Hazara and Uzbek Leaders took part in the process just like later Afghan President Hamid Karzai. They agreed to work under the banner of the exiled Afghan king Zahir Shah in Rome.

After Pakistan had funded, directed and supported the Taliban's rise to power in Afghanistan, Massoud and the United Front received some assistance from India. India was particularly concerned about Pakistan's Taliban strategy and the Islamic militancy in its neighborhood; it provided U.S.$70 million in aid including two Mi-17 helicopters, three additional helicopters in 2000 and US$8 million worth of high-altitude equipment in 2001. Also In the 1990s, India had run a field hospital at Farkor on the Tajik-Afghan border to treat wounded fighters from the then Northern Alliance that was battling the Taliban regime in Afghanistan. It was at the very same hospital that the Northern Alliance leader Ahmed Shah Masood was pronounced dead after being assassinated just two days before the 9/11 terror strikes in 2001. Furthermore, the alliance supposedly also received minor aid from Tajikistan, Russia and Iran because of their opposition to the Taliban and the Pakistani control over the Taliban's Emirate. Their support, however, remained limited to the most needed things. Meanwhile, Pakistan engaged up to 28,000 Pakistani nationals and regular Pakistani army troops to fight alongside the Taliban and Al Qaeda forces against Massoud.

Declassified Defense Intelligence Agency (DIA) documents from November 2001 show that Massoud had gained "limited knowledge... regarding the intentions of Al-Qaeda to perform a terrorist act against the U.S. on a scale larger than the 1998 bombing of the U.S. Embassies in Kenya and Tanzania." They noted that he warned about such attacks.

In April 2003, the Karzai administration announced the creation of a commission to investigate the assassination of Massoud. In 2003, French investigators announced that they and the FBI had been able to trace the provenance of the camera used in the assassination, which had been stolen in France some time earlier.

Massoud's family since his death have had a great deal of prestige in the politics of Afghanistan. One of his six brothers, Ahmad Zia Massoud, was the Vice President of Afghanistan from 2004 until 2009 under the first democratically elected government of Afghanistan. Unsuccessful attempts have been made on the life of Ahmad Zia Massoud in 2004 and late 2009. The Associated Press reported that 8 Afghans died in the attempt on Ahmad Zia Massoud's life. Ahmad Zia Massoud leads the National Front of Afghanistan (a United Front group). Another brother, Ahmad Wali Massoud, was Afghanistan's Ambassador to the United Kingdom from 2002 to 2006. He is a member of Abdullah Abdullah's National Coalition of Afghanistan (another United Front group).

Massoud was posthumously named "National Hero" by the order of President Hamid Karzai after the Taliban were ousted from power. The date of Massoud's death, September 9, is observed as a national holiday known as "Massoud Day". His followers call him Amer Sāhib-e Shahīd (آمر صاحب شهید), which translates to "(our) martyred commander." Massoud has been described as one of the greatest guerilla Leaders of the 20th century and has been compared to Tito, Ho Chi Minh and Che Guevara.

The PDPA started reforms along Marxist–Leninist and Soviet lines. The reforms and the PDPA's affinity to the Soviet Union were met with strong resistance by the population, especially as the government attempted to enforce its Marxist policies by arresting or executing those who resisted. Between 50,000 and 100,000 people were estimated to have been arrested and killed by communist troops in the countryside alone. Due to the repression, large parts of the country, especially the rural areas, organized into open revolt against the PDPA government. By spring 1979 unrest had reached 24 out of 28 Afghan provinces, including major urban areas. Over half of the Afghan army either deserted or joined the insurrection.

The Afghanistan Justice Project (AJP) says, that "while [Hekmatyar's anti-government] Hizb-i Islami is frequently named as foremost among the factions responsible for the deaths and destruction in the bombardment of Kabul, it was not the only perpetrator of these violations." According to the AJP, "the scale of the bombardment and kinds of weapons used represented disproportionate use of force" in a capital city with primarily residential areas by all the factions involved—including the government forces. Crimes were committed by individuals within the different armed factions. Gulbuddin Hekmatyar released 10,000 dangerous Criminals from the main prisons into the streets of Kabul to destabilize the city and cut off Kabul from water, food and Energy supplies. The Iran-controlled Wahdat of Abdul Ali Mazari, as well as the Ittihad of Abdul Rasul Sayyaf supported by Saudi Arabia, targeted civilians of the 'opposite side' in systematic atrocities. Abdul Rashid Dostum allowed crimes as a perceived payment for his troops. The Taliban, placing Kabul under a two-year siege and bombardment campaign from early 1995 onwards, in later years committed massacres against civilians, compared by United Nations observers to those that happened during the War in Bosnia.