With the outbreak of the Russo-Turkish War in 1805, his father fled with family to Imperial Russia. The young Alexander had received a thorough education, becoming fluent in Russian, French, German and Romanian. At the age of 15, he was presented to the Russian Court, where he came under the patronage of Empress Maria Feodorovna.

On 12 April 1808, he entered a commission in the prestigious Chevalier Guard Regiment with the rank of cornet. Moving rapidly up the ranks, he was promoted to lieutenant on 27 September 1810 and to Stabs-Rittmeister on 18 October of the same year. During the French invasion of Russia, he fought in the battles of Klyastitsy and Polotsk. Promoted to full Rittmeister (Captain) on 20 February 1813, he went on to participate in the Battle of Bautzen. On July 6, he was transferred to the 6th Klyastitsy Hussar Regiment as Lieutenant Colonel, and participated with his new unit in the Battle of Dresden, where his right arm was torn off by a shell. Although he was immediately promoted to full Colonel, it meant that Ypsilantis would not be able to see action again. However, he attended the Congress of Vienna where he was a popular figure in society, and earned the sympathy of Tsar Alexander I, who appointed him his aide-de-camp on 1 January 1816. In late 1817, at the age of 25 he became a Major General and commander of the 1st Brigade of Hussars of the 1st Hussar Division.

In 1820, on the refusal of Count John Capodistria, the then Russian foreign minister, to accept the post of leader of the Filiki Eteria, the post was offered to Ypsilantis, who was then elected as the leader of the secret society. Following that, he processed and approved the general plan of the Greek war of independence, which was revised during May 1820 at Bucharest, with the participation of rebel captains from mainland Greece. The main points of the plan were:

• to aid the simultaneous revolt of Serbs and Montenegrins.
• to provoke a revolt in Wallachia, by also enlisting rebels from the Serbian lands, battle-hardened from the first and second Serbian uprisings.
• to provoke civil unrest in Istanbul through the use of agents, and burn the Ottoman fleet at the city's port.
• to start the revolution in Greece in the Peloponnese, after Ypsilantis' arrival there.

Because information regarding the existence and the activities of the Filiki Eteria had leaked to the Ottoman authorities, Ypsilantis hastened the outbreak of the revolt in Wallachia and participated personally in it. Beginning the revolution in the Danubian Principalities had the added benefit that they, being autonomous under the joint suzerainty of Russia and the Ottoman Empire, did not have Ottoman garrisons, while in turn the local leaders were entitled to maintain small armed retinues for their own protection.

Therefore, on 22 February 1821 (O.S.), accompanied by several other Greek officers in Russian service, he crossed the Prut river at Sculeni into the Principalities. Two days later, at Iaşi he issued a proclamation, announcing that he had "the support of a great power" (meaning Russia). Ypsilantis hoped that a revolt would ultimately lead to a Russian intervention: since the Ottomans would have to invade and quell the rebellion, the Orthodox Russians would certainly intervene in favour of their fellow Orthodox. In this hope he was not unjustified, since eventually, the Greek rebellion led to the Russo-Turkish War of 1828 in which Russian troops marched to the outskirts of Constantinople and forced the Sultan to recognize the autonomy of the new Greek state. In 1821 however, Tsar Alexander was still a committed member of the Holy Alliance, and acted swiftly to disassociate himself from Ypsilantis: Count Capodistria denounced Ypsilantis for having misused the Tsar's trust, stripped him of his rank and commanded him to lay down arms. Soon after, Capodistria himself had to take an "indefinite leave of absence" from his post.

These moves emboldened the Turks, who began assembling a large number of troops to quell the insurrection in Wallachia. Ypsilantis marched from Iaşi to Bucharest, trying to enlist volunteers. It was then that the Sacred Band was formed, composed of young Greek volunteers from all over Europe. In Bucharest, where he had arrived after some weeks' delay, it became plain that he could not rely on the Wallachian Pandurs to continue their Oltenian-based revolt for assistance to the Greek cause; Ypsilantis was met with mistrust by the Pandur leader Tudor Vladimirescu, who, as a nominal ally to the Eteria, had started the rebellion as a move to prevent Scarlat Callimachi from reaching the throne in Bucharest, while trying to maintain relations with both Russia and the Ottomans. He further took the Russian renunciation of Ypsilantis to mean that his commitment to the Filiki Eteria was over, and as a result, a conflict erupted inside his camp. In the end, Vladimirescu was tried and executed by the pro-Greek faction and the Eteria.

Meanwhile, the Ottomans crossed the Danube river with 30,000 tactical troops, and Ypsilantis, instead of advancing on Brăila, where he arguably could have prevented the Ottoman armies entering the Principalities and might have forced Russia to accept a fait accompli, retreated and organized his defense at a semi-mountainous area close to Iaşi, where he ordered the executions of several pro-Ottoman leaders. There followed a series of major battles that lead to the defeat of the Eteria's forces, culminating in the final defeat at Drăgăşani on June 19. Ypsilantis, accompanied by his brother Demetrius and a remnant of his followers, retreated to Râmnic, where he spent some days negotiating with the Austrian authorities for permission to cross the frontier. Fearing that his defeated followers might surrender him to the Turks, he gave out that Austria had declared war on Turkey, caused a Te Deum to be sung in the church of Cozia, and, on pretext of arranging measures with the Austrian commander-in-chief, crossed the frontier. But the reactionary policies of the Holy Alliance were enforced by Francis I and Klemens Metternich, and the country refused to give asylum for leaders of revolts in neighboring countries. Ypsilantis was kept in close confinement for seven years (1823 to 1827 in Terezín), until he was released at the insistence of the emperor Nicholas I of Russia.

After his release, he retired to Vienna where he died in extreme poverty and misery on January 31, 1828. His last wish that his heart be removed from his body and sent to Greece was fulfilled by Georgios Lassanis, and it is now located at the Amalieion in Athens. His appearance in likenesses and the accounts of his life suggest he had Dystrophia myotonica (DM). DM is an inherited multi-system disorder which shortens life. His body was originally buried on St. Marx cemetery, and later on his remains were transferred to the Ypsilanti-Sina estate in Rappoltenkirchen-Austria by members of his family on February 18, 1903. His last transfer occurred on August 1964, when he was finally relocated to the Taxiarches Church in Pedion tou Areos Athens, Greece, 136 years after his death.

Alexander Ypsilantis is mentioned by Alexander Pushkin in his short story The Shot. The hero of Pushkin's story, Silivio dies in a campaign under command of Ypsilantis.