Akhundzade was born in 1812 in Nukha (present-day Shaki, Azerbaijan) to a wealthy land owning family from Iranian Azerbaijan. His parents, and especially his uncle Haji Alaskar, who was Fatali's first teacher, prepared young Fatali for a career in Shi'a clergy, but the young man was attracted to the literature. In 1832, while in Ganja, Akhundzade came into contact with the poet Mirza Shafi Vazeh, who introduced him to a Western secular thought and discouraged him from pursuing a religious career. Later in 1834 Akhundzade moved to Tiflis (present-day Tbilisi, Georgia), where he worked as a translator of Oriental languages. Since 1837 he worked as a teacher in Tbilisi uezd Armenian school, then in Nersisyan school. In Tiflis his acquaintance and friendship with the exiled Russian Decembrists Alexander Bestuzhev-Marlinsky, Vladimir Odoyevsky, poet Yakov Polonsky, Armenian writers Khachatur Abovian, Gabriel Sundukyan and others played some part in formation of Akhundzade's Europeanized outlook.
Akhundzade's first published work was The Oriental Poem (1837), written to lament the death of the great Russian poet Alexander Pushkin. But the rise of Akhundzade's literary activity comes in the 1850s. In the first half of the 1850s, Akhundzade wrote six comedies – the first comedies in Azerbaijani literature as well as the first samples of the national dramaturgy. The comedies by Akhundzade are unique in their critical pathos, analysis of the realities in Azerbaijan of the first half of the 19th century. These comedies found numerous responses in the Russian other foreign periodical press. The German Magazine of Foreign Literature called Akhundzade "dramatic genius", "the Azerbaijani Molière" 1. Akhundzade's sharp pen was directed against everything that hindered the way of progress, freedom and enlightenment, and at the same time his comedies were imbued with the feeling of faith in the bright future of the Azerbaijani people.
In 1859 Akhundzade published his short but famous novel The Deceived Stars. In this novel he laid the foundation of Azerbaijani realistic historical prose, giving the models of a new genre in Azerbaijani literature. By his comedies and dramas Akhundzade established realism as the leading trend in Azerbaijani literature.
In the 1920s, the Azerbaijan State Academic Opera and Ballet Theatre was named after Akhundzade.
According to Professor Ronald Grigor Suny:
Turkish nationalism, which developed in part as a reaction to the nationalism of the Christian minorities [of the Ottoman Empire], was, like Armenian nationalism, heavily influenced by thinkers who lived and were educated in the Russian Empire. The Crimean Tatar Ismail Bey Gasprinski and the Azerbaijani writer Mirza Fath Ali Akhundzade inspired Turkish intellectuals in the late nineteenth and early twentieth centuries.
According to Professor Tadeusz Swietochowski:
In his glorification of the pre-Islamic greatness of Iran, before it was destroyed at the hands of the "hungry, naked and savage Arabs, "Akhundzada was one of the forerunners of modern Iranian nationalism, and of its militant manifestations at that. Nor was he devoid of anti-Ottoman sentiments, and in his spirit of the age-long Iranian Ottoman confrontation he ventured into his writing on the victory of Shah Abbas I over the Turks at Baghdad. Akhundzade is counted as one of the founders of modern Iranian literature, and his formative influence is visible in such major Persian-language writers as Malkum Khan, Mirza Agha Khan and Mirza Abd ul-Rahim Talibi. All of them were advocates of reforms in Iran. If Akhundzade had no doubt that his spiritual homeland was Iran, Azerbaijan was the land he grew up and whose language was his native tongue. His lyrical poetry was written in Persian, but his work that carry messages of social importance as written in the language of the people of his native land, azari. With no indication of split-personality, he combined larger Iranian identity with Azerbaijani – he used the term vatan (fatherland) in reference to both.
Akhundzade also supported the Russian Empire. According to Walter Kolarz:
The greatest Azerbaidzhani poet of the nineteenth century, Mirza Fathali Akhundov (1812-78), who is called the "Molière of the Orient", was so completely devoted to the Russian cause that he urged his compatriots to fight Turkey during the Crimean War.
Akhundzadeh, Mirza Aqa Khan Kermani and Jalal al Din Mirza Qajar are the forerunners of intellectual romantic Iranian nationalism. Akhundzadeh proudly identified himself as belonging to the nation of Iran (mellat-e Irān) and to the Iranian homeland (waṭan). He influenced Jālāl-al-Din Mirzā (a son of Bahman Mirza Qajar) through friendship and correspondence as well as Mirza Aqa Khan Kermani. Jalāl al-Dīn Mirza (1826–70), a Qajar prince, initiated the reconstruction of Iranian national history in his Nāme-ye Khosravan (Book of the Monarchs), the first history textbook for Dar ul-Funun in simple Persian, purified of Arabic words.Mirza Aqa Khan Kermani (1854–96) followed Jalāl-al-Din Mirzā in producing a national history of Iran, Āʾina-ye sekandari, extending from the mythological past to the Qajar era, to compare and contrast Iran’s glorious past with its present plight.
Well ahead of his time, Akhundzade was a keen advocate for alphabet reform, recognizing deficiencies of Perso-Arabic script with regards to Turkic sounds. He began his work regarding alphabet reform in 1850. His first efforts focused on modifying the Perso-Arabic script so that it would more adequately satisfy the phonetic requirements of the Azerbaijani language. First, he insisted that each sound be represented by a separate symbol - no duplications or omissions. The Perso-Arabic script expresses only three vowel sounds, whereas Azeri needs to identify nine vowels. Later, he openly advocated the change from Perso-Arabic to a modified Latin alphabet. The Latin script which was used in Azerbaijan between 1922 and 1939, and the Latin script which is used now, were based on Akhundzade's third version.
Beside of his role in Azerbaijani literature and Iranian nationalism, Akhundzadeh was also known for his harsh criticisms of religions (mainly Islam) and stays as the most iconic Azerbaijani atheist. National Library of Azerbaijan and Azerbaijan State Academic Opera and Ballet Theatre as well as couple of streets, parks and libraries are also named after Akhundzade in Azerbaijan. A cultural museum in Tbilisi, Georgia that focuses on Georgian-Azerbaijani cultural relations is also named after him.
Punik, town in Armenia was also named in the honour of Akhundzade until very recently. TURKSOY hosted a groundbreaking ceremony to declare 2012 as year of Mirza Fatali Akhundzade.