He was born in Avlonya (present day Vlorë) to a noble family. Having finished the primary education in his hometown, and the gymnasium Zosimea in Ioannina, in 1859 he moved to Istanbul where he embarked on a career as an Ottoman civil servant, being identified with the liberal reform wing of the service under Midhat Pasha, and was governor of several towns in the Balkans. During these years he took part in efforts for the standardization of the Albanian alphabet and the establishment of an Albanian cultural association. By 1877, Ismail seemed to be on the brink of important functions in the Ottoman administration, but when Sultan Abdulhamid II dismissed Midhat as prime minister, Ismail Qemali was sent into exile in western Anatolia, though the Sultan later recalled him and made him governor of Beirut. However, his liberal policy recommendations caused him to fall out of favour with the Sultan again, and in May 1900 Ismail Qemali boarded the British ambassador's yacht and claimed asylum. He was conveyed out of Turkey and for the next eight years lived in exile, working both to promote constitutional rule in the Ottoman Empire and to advance the Albanian national cause within it. After the Young Turk Revolution of 1908, he became a deputy in the restored Ottoman Parliament, working with liberal politicians and the British. In 1909, during a rising against the Young Turks, he was briefly made President of the Ottoman National Assembly but was forced to leave Istanbul forever a day or two later. Thereafter his political career concentrated solely on Albanian nationalism.

He was a principal figure in the Albanian Declaration of Independence and the formation of an independent government of Albania in 28 November 1912. This signaled the end of almost 500 years of Ottoman rule in Albania. Together with Isa Boletini and Luigj Gurakuqi, he raised the flag on the balcony of the two - story building in Vlorë where the Declaration of Independence had just been signed. He was prime minister of Albania from 1912 to 1914.

During World War I, Ismail Qemali lived in exile in Paris, where, though short of funds, he maintained a wide range of contacts and collaborated with the correspondent of the continental edition of the Daily Mail, Somerville Story, to write his memoirs. His autobiography, published after his death, is the only memoir of a late Ottoman statesman to be written in English and is a unique record of a liberal, multicultural approach to the problems of the dying Empire. In 1918 Ismail Qemali travelled to Italy to promote support for his movement in Albania, but was prevented by the Italian government from leaving Italy and remained as its involuntary guest in a hotel in Perugia, much to his irritation. He died of an apparent heart attack at dinner there one evening.

Ismail Qemali is depicted on the obverses of the Albanian 200 lekë banknote of 1992 - 1996, and of the 500 lekë banknote issued since 1996.