Nader Shah was born in the fortress of Dastgerd into the Qereqlu clan of the Afshars, a semi-nomadic Turkic Qizilbash tribe settled in the northern valleys of Khorasan, a province in the northeast of the Persian Empire. His father, Emam Qoli, was a herdsman who may also have been a coatmaker.

At the age of 13, his father died and Nader had to find a way to support himself and his mother. He had no source of income other than the sticks he gathered for firewood, which he transported to the market. Many years later, when he was returning in triumph from his conquest of Delhi, he led the army to his birthplace and made a speech to his generals about his early life of deprivation. He said, "You now see to what height it has pleased the Almighty to exalt me; from hence, learn not to despise men of low estate." Nader's early experiences did not, however, make him particularly compassionate toward the poor. Throughout his career, he was only interested in his own advancement. Legend has it that in 1704, when he was about 17, a band of marauding Uzbek Tartars invaded the province of Khorasan, where Nader lived with his mother. They killed many peasants. Nader and his mother were among those who were carried off into slavery. His mother died in captivity. Somehow, Nader managed to escape and returned to the province of Khorasan in 1708.

Nader grew up during the final years of the Safavid dynasty which had ruled Iran since 1502. At its peak, under such figures as Abbas the Great, Safavid Persia had been a powerful empire, but by the early 18th century the state was in serious decline and the reigning shah, Sultan Husayn, was a weak ruler. When Sultan Husayn attempted to quell a rebellion by the Ghilzai Afghans in Kandahar, the governor he sent (Gurgin Khan) was killed. Under their leader Mahmud Hotaki, the rebellious Afghans moved westwards against the shah himself and in 1722 they defeated a force at the Battle of Gulnabad and then besieged the capital, Isfahan. After the Shah failed to escape or to rally a relief force elsewhere, the city was starved into submission and Sultan Husayn abdicated, handing power to Mahmud. In Khorasan, Nader at first submitted to the local Afghan governor of Mashhad, Malek Mahmud, but then rebelled and built up his own small army. Sultan Husayn's son had declared himself Shah Tahmasp II, but found little support and fled to the Qajar tribe, who offered to back him. Meanwhile, Persia's imperial neighboring rivals, the Ottomans and the Russians, took advantage of the chaos in the country to seize and divide territory for themselves. In 1722, Russia, led by Peter the Great and further aided by some of the most notable Caucasian regents of the disintegrating Safavid Empire, such as Vakhtang VI, launched the Russo-Persian War (1722-1723) in which Russia captured swaths of Persia's territories in the North Caucasus, South Caucasus, as well as in northern mainland Persia. This included mainly, but was not limited to, the losses of Dagestan (including its principal city of Derbent), Baku, Gilan, Mazandaran, and Astrabad. The regions to the west of that, mainly Iranian territories in Georgia, Iranian Azerbaijan, and Armenia, were taken by the Ottomans. The newly gained Russian and Turkish possessions were confirmed and further divided amongst themselves in the Treaty of Constantinople (1724).

Tahmasp and the Qajar leader Fath Ali Khan (the ancestor of Agha Mohammad Khan Qajar) contacted Nader and asked him to join their cause and drive the Ghilzai Afghans out of Khorasan. He agreed and thus became a figure of national importance. When Nader discovered that Fath Ali Khan was in treacherous correspondence with Malek Mahmud and revealed this to the shah, Tahmasp executed him and made Nader the chief of his army instead. Nader subsequently took on the title Tahmasp Qoli (Servant of Tahmasp). In late 1726, Nader recaptured Mashhad.

Nader chose not to march directly on Isfahan. First, in May 1729, he defeated the Abdali Afghans near Herat. Many of the Abdali Afghans subsequently joined his army. The new shah of the Ghilzai Afghans, Ashraf, decided to move against Nader but in September 1729, Nader defeated him at the Battle of Damghan and again decisively in November at Murchakhort, banishing the Afghans from Persian soil forever. Ashraf fled and Nader finally entered Isfahan, handing it over to Tahmasp in December. The citizens' rejoicing was cut short when Nader plundered them to pay his army. Tahmasp made Nader governor over many eastern provinces, including his native Khorasan, and married him to his sister. Nader pursued and defeated Ashraf, who was murdered by his own followers. In 1738 Nader Shah besieged and destroyed the last Hotaki seat of power at Kandahar. He built a new city near Kandahar, which he named "Naderabad".

In the spring of 1730, Nader attacked Persia's archrival the Ottomans and regained most of the territory lost during the recent chaos. At the same time, the Abdali Afghans rebelled and besieged Mashhad, forcing Nader to suspend his campaign and save his brother, Ebrahim. It took Nader fourteen months to crush this uprising.

Relations between Nader and the Shah had declined as the latter grew jealous of his general's military successes. While Nader was absent in the east, Tahmasp tried to assert himself by launching a foolhardy campaign to recapture Yerevan. He ended up losing all of Nader's recent gains to the Ottomans, and signed a treaty ceding Georgia and Armenia in exchange for Tabriz. Nader, furious, saw that the moment had come to ease Tahmasp from power. He denounced the treaty, seeking popular support for a war against the Ottomans. In Isfahan, Nader got Tahmasp drunk then showed him to the courtiers asking if a man in such a state was fit to rule. In 1732 he forced Tahmasp to abdicate in favour of the Shah's baby son, Abbas III, to whom Nader became regent.

Nader decided, as he continued the 1730-35 war, that he could win back the territory in Armenia and Georgia by seizing Ottoman Baghdad and then offering it in exchange for the lost provinces, but his plan went badly amiss when his army was routed by the Ottoman general Topal Osman Pasha near the city in 1733. Nader decided he needed to regain the initiative as soon as possible to save his position because revolts were already breaking out in Persia. He faced Topal again with a larger force and defeated and killed him. He then besieged Baghdad, as well as Ganja in the northern provinces, earning a Russian alliance against the Ottomans. Nader scored a great victory over a superior Ottoman force at Baghavard and by the summer of 1735, Persian Armenia and Georgia were his again. In March 1735, he signed a treaty with the Russians in Ganja by which the latter agreed to withdraw all of their troops from Persian territory, those which had not been ceded back by the 1732 Treaty of Resht yet, resulting in the reestablishment of Persian rule over all of the Caucasus and northern mainland Iran again.

Nader suggested to his closest intimates, after a great hunting party on the Moghan plains (presently split between Azerbaijan and Iran), that he should be proclaimed the new king (shah) in place of the young Abbas III. The small group of close intimates, Nader's friends, included Tahmasp Khan