Nawab Mir Osman Ali Khan, the seventh Nizam was born at the Purani Haveli Palace on 6 April 1886 (30 Jamadi-is-Sani 1303 H). He was the second son of Mir Mahboob Ali Khan by Amat-uz-Zahrunnisa Begum. Due to the unfortunate death of the first son of Mir Mahboob Ali in 1887, Osman Ali was ascended to the throne to govern the state of Hyderabad.

Under the strict administration of Mahboob Ali Khan, the young Osman was strictly brought up. The Nizam was very austere in his treatment of his son. Mahboob Ali Khan was particularly careful in giving the boy very little money to spend. Thus it was through his father that young Osman learnt how to make careful use of his money both as a ruler and as a private individual.

Fresh urgency was lent to the question of Prince Osman Ali Khan`s education by the serious illness of his father in January 1892; this left the Nizam in a weak and anaemic condition while his Heir was still only about eight years old. The Resident framed a comprehensive scheme outlining the broad principles which the Nizam should be advised to adopt in the education and training of his Heir. The Resident emphasised the necessity of avoiding the mistake made in the training of the present Nizam namely, treating him always as `Nizam` and of indulging every caprice, instead of regarding him as a boy under tuition and subjecting him to proper discipline and control`. In the event, the problem of Sahibzada Osman`s education was discussed by Lord Lansdowne personally with Nawab Mir Mahboob Ali Khan in 1892. Mir Osman Ali Khan had been initiated into the study of the Holy Quran and three eminent Moulvis named Moulvi Anwarulla Khan Sahib, Moulvi Ashraf Hussain Khan Sahib and Hafiz Muhammad Anwaruddin Khan Sahib had been appointed to supervise his religious instruction. Prince Osman was so capable that within a short time he had thoroughly grasped all the lessons taught and could soon read new lessons quite easily by himself. The British Government and the Resident submitted a scheme of his own to the Nizam in which the Nizam was advised to follow with a few necessary changes the system which had been used for his own education. This involved appointing an Englishman as a Superintendent of the Sahibzada`s education with control over the other tutors; the Superintendent to be directly responsible to the Nizam for the entire curriculum and training.

Later Osman Ali Khan was given the training in practical administration. During his training period, he was to go through settled revenue files and civil and criminal cases and writing his opinion on them which was subsequently corrected by the Madadgar of the Department concerned. However, from the Siaha of 21 August 1911, the educational training of the Sahibzada continued till the last days of his father Nawab Mir Mahboob Ali Khan. Due to the sudden illness of Mir Mehboob fastened his death on Tuesday 29 August.

As soon as the Nizam had passed away, the Minister, the Assistant Ministers, the Nobles of the Paigah, the dignitaries of the State and the Courtiers of the Palace repaired to the residence of the Sahibzada, Nawab Mir Osman Ali Khan, and offered their condolences at the sad demise of their master. Certainly after the death of his father Nawab Mir Osman Ali Khan was consorted to the throne and was the person of great nobility, who was determined to work whole heartedly for their welfare and prosperity.

At the age of 21, on April 14, 1906, Osman Ali married Dulhan Pasha Begum who was the daughter of Nawab Jahangir Jung. Osman Ali had 42 concubines and seven wives. His second wife was the daughter of Nawab Nazir Jung Bahadur, Iqbal Begum. He had fathered 42 children among whom Azam Jah and Moazzam Jah were the eldest of his sons by his first wife Dulhan Pasha Begum.

The reign of Mir Osman Ali Khan saw the climax of the cultural, economic and administrative development of Hyderabad which had begun during the time of Salar Jung I. It should be observed that one of the major reasons for this all-round progress was the great financial stability which Hyderabad attained during the rule of Mir Osman Ali Khan. Not only was the seventh Nizam a good and shrewd financier himself, but from the beginning of the twentieth century Hyderabad had had the good fortune to acquire the services of a galaxy of financial experts, starting with Sir Cassan Walker in 1901 then after him, Sir Reginald Glancy, and then Muhammad Akbar Nazar Ali Haidari, who was later known as Sir Akbar Haidari.

The reigning period of Osman Ali Khan witnessed the drastic reformations and development, in the revenue department, perfect law and order in the judicial reforms. Apart from these re constructions in the administrative sections, Osman Ali Khan showed great excellence in the building of the great irrigation projects which led to the rapid economic development of the country. Osman Ali Khan`s reign was also memorable for linking up the most distant parts of the Hyderabad Dominions. Even this Nizam took special care in reformations and modernisation and preservation of ancient monuments and the revival of an interest in the ancient culture, relics, monuments of the Deccan and his own dominion. He also took initiative in establishing new magnificent edifices in his dominion. However, Osman Ali Khan`s patronage of art and architecture was reflected in almost all parts of his domain and these instances of art and architecture unfolded throughout India and also in and around the Muslim world as well.