Dorab was the elder son of Hirabai and Parsi Zoroastrian Jamsetji Nusserwanji Tata. Through an aunt, Jerbai Tata, who married a Bombay merchant, Dorabji Saklatvala, he was a cousin of Shapurji Saklatvala who later became a Communist Member of the British Parliament.
Tata received his primary education at the Proprietary High School in Bombay (now Mumbai) before travelling to England in 1875, where he was privately tutored. He entered Gonville and Caius College, Cambridge in 1877, where he remained for two years before returning to Bombay in 1879. He continued his studies at St. Xavier's College, Bombay, where he obtained a degree in 1882.
Upon graduating, Dorab worked for two years as a journalist at the Bombay Gazette. In 1884, he joined the cotton business division of his father's firm. He was first sent to Pondicherry, then a French colony, to determine whether a cotton mill might be profitable there. Thereafter, he was sent to Nagpur, to learn the cotton trade at the Empress Mills which had been founded by his father in 1877.
Dorabji's father Jamshetji had visited Mysore State in south India on business, and had met Dr. Hormusji Bhabha, a Parsi and the first Indian Inspector-General of Education of that state. While visiting the Bhabha home, he had met and approved of young Meherbai, Bhabha's only daughter. Returning to Bombay, Jamshetji sent Dorab to Mysore State, specifically to call on the Bhabha family. Dorab did so, and duly married Meherbai in 1897. The couple did not have children.
Meherbai's brother Jehangir Bhabha became a reputed lawyer. He was the father of the scientist Homi J. Bhabha and thus Dorabji was Homi Bhabha's uncle by marriage. This family connection explains why the Tata group lavishly funded Bhabha's research and the research institutions set up by Bhabha, including the Tata Institute of Fundamental Research.
Dorabji was intimately involved in the fulfilment of his father's ideas of a modern iron and steel industry, and agreed to the necessity for hydroelectric electricity to power the industry. Dorab is credited with the establishment of the conglomerates Tata Steel in 1907 which his father founded and Tata Power in 1911, which are the core of the present-day Tata Group. Dorabji is known to have personally accompanied the mineralogists who were searching for iron fields, and it is said that his presence encouraged the researchers to look in areas that would otherwise have been neglected. Under Dorabji's management, the business that had once included three cotton mills and the Taj Hotel Bombay grew to include India's largest private sector steel company, three electric companies and one of India's leading insurance companies. Founder of New India Assurance Co Ltd. in 1919, the largest General Insurance company in India. Dorabji Tata was knighted in January 1910 by Edward VII, becoming Sir Dorabji Tata.
Dorabji was extremely fond of sports, and was a pioneer in the Indian Olympic movement. As president of the Indian Olympic Association, he financed the Indian contingent to the Paris Olympics in 1924. The Tata family, like most of India's big businessmen, were Indian nationalists but did not trust the Congress because it seemed too aggressively hostile to the Raj, too socialist, and too supportive of trade unions.
Meherbai Tata died of leukaemia in 1931 at the age of 52. Shortly after her death, Dorabji established the Lady Tata Memorial Trust to advance the study into diseases of the blood.
On 11 March 1932, one year after Meherbai's death and shortly before his own, he established a trust fund which was to be used "without any distinction of place, nationality or creed," for the advancement of learning and research, disaster relief, and other philanthropic purposes. That trust is today known as the Sir Dorabji Tata Trust. Dorabji additionally provided the seed money to fund the setting up of India's premier scientific and engineering research institution, the Indian Institute of Science, Bangalore.
Dorabji died in Bad Kissingen, Germany on 3 June 1932, at the age of 73. He is buried alongside his wife Meherbai in Brookwood Cemetery, Woking, England. They had no children.