Ali Khalilov was born in Nakhchivan.

He received his early education in a mullahkhana and at M.T. Sidgi's school. He studied at a technical vocational school in Tbilisi (1911–1915).

After graduating, he returned to Nakhchivan and taught at the Rushdiyya school. He worked at the Nakhchivan theater. In 1917, he played the roles of Veli and Hambal in the comedies "Arshin mal alan" and "O olmasin, bu olsun" staged by Rza Tahmasib. He worked as the director of the Nakhchivan theater (1920-1935). In the late 1930s, he went to Baku and worked at the Azerbaijan State Academic Drama Theater. The book "History of the Nakhchivan theater" was published (1964).

Honored Artist of the Nakhchivan Autonomous Republic Ali Khalilov died in 1975.