Born in Nairobi, Kenya and raised in Toronto, Ontario, he is the son of Murad Velshi, the first Canadian of Indian origin elected to the Legislative Assembly of Ontario and his wife Mila, who grew up in South Africa. He is an Ismaili Muslim of Gujarati Indian descent and earned a degree in religious studies from Queen's University in Kingston, Ontario in 1994. During his time at Queen's he made news by organizing protests against Preston Manning and Canada's Reform Party. In 2010, Velshi was awarded the Queen's University Alumni Achievement Award. In 2016, Velshi was awarded an Honorary Doctorate of Laws by his Alma Mater. He previously attended Toronto's Northern Secondary School during which time he was elected school President.

In 1996, Velshi was awarded a fellowship to the United States Congress from the American Political Science Association. In this capacity he worked with Lee H. Hamilton, then a Democratic Representative from Indiana.

In Toronto, Velshi began his professional reporting career as a General Assignment reporter for CFTO. He later became a Business reporter and anchor for CablePulse 24 and its then sister station CityTV. In 1999, he joined Report on Business Television, (now BNN - Business News Network) Canada's first all-business news specialty channel. Velshi hosted The Business News, Canada's first prime time Business news hour.

Velshi moved to the U.S. in September 2001, joining Business news channel CNNfn in New York City. He anchored several shows including Insights, Business Unusual, Street Sweep, Your Money, and co-hosted The Money Gang with Pat Kiernan before the network closed down in December 2004.

After The Turnaround, Velshi was assigned to the newly launched The Situation Room from 2005 to 2006. Velshi joined American Morning as Business correspondent in late 2006 and then again as co-anchor in 2011.

In addition to appearing on The Daily Show, Velshi appeared on The Oprah Winfrey Show on October 3, 2008, during the global financial crisis, and on The View on February 4, 2009 after the launch of his first book on the crisis.

Velshi is represented by the New York literary agency N.S. Bienstock, and by speaking agency Greater Talent Network. His first book, Gimme My Money Back: Your Guide to Beating the Financial Crisis, was published on January 2, 2009. His second book, How to Speak Money: The Language & Knowledge You Need Now, co-authored by long-time friend and co-anchor Christine Romans, was released by John Wiley & Sons in November 2011. Velshi has written monthly columns for both Money Magazine and Delta Sky magazine.

Velshi played himself in the 2010 Oliver Stone film Wall Street: Money Never Sleeps.

On April 4, 2013, it was announced that Velshi would be leaving CNN to join Al Jazeera America to host a weekly 30 minute magazine-style prime-time program called Real Money with Ali Velshi. He was the first on-air personality to be hired for the new channel. The channel stated that it hoped that Velshi's show would initially start off as a weekly show and become a daily show by the end of the year. Real Money with Ali Velshi launched on August 20, 2013 as a daily weekday show. On May 12, 2015 the show re-launched as Ali Velshi on Target. This show ended in April 2016 when Al Jazeera America shut down.

Referencing Velshi's signature bald pate, the Comedian Jon Stewart has referred to Velshi as the "Hairless Prophet of Doom" on The Daily Show,—the "H-POD" moniker is now frequently repeated by others.

In October 2016 Velshi joined MSNBC, with additional duties at MSNBC's parent news division, NBC News, for which he serves as Chief Business Correspondent.

As of March 2018 Velshi co-anchors the 11:00 AM MSNBC news program Velshi & Ruhle with Stephanie Ruhle, as well as having his own 3:00 PM news program MSNBC Live with Ali Velshi.

During a live interview MSNBC anchors Stephanie Ruhle and Ali Velshi were taken aback when Trenton Garmon, an attorney for embattled Alabama Senate nominee Roy Moore, tried to connect Velshi’s background with cultural acceptance of adults dating minors, with their parents' approval, in Alabama.