Farahi was born in Phreha (hence the name "Farahi"), a village in the district of Azamgarh (Uttar Pradesh, India). He belonged to a distinguished family, and was a maternal cousin of the famous theologian-historian Muhammad Shibli Numani (1858-1914).

After studying Arabic, Persian, and Islamic sciences with several prominent religious scholars-Shibli Numani was one of them-Farahi, about twenty years of age, secured admission to the reputed Aligarh Muslim College in order to study modern disciplines of knowledge. His recommender was Sir Sayyid Ahmad Khan (1817-1897), the founder of the college. In his letter addressed to the principal, an Englishman, Sir Sayyid wrote that he was commending him a young man who was a greater scholar of Arabic and Persian than the professors of the college. While a student at the college, Farahi rendered parts of the At-Tabaqat al-Kubra of Abu Abd Allah Muhammad ibn Sad az-Zuhri (784-845) into Persian. The translation was found to be so good that Sir Sayyid had it included in the collage syllabus.Farahi obtained his B.A from Ilahabad University.

For the next many years, Farahi taught Arabic at various institutions, including Algarh and Dar-ul-Ulum., Hyderabad. During his stay in Hyderabad, Farahi conceived the idea of establishing a university where all religious and modern sciences would be taught in Urdu. The scheme he prepared for this purpose later materialized in the form of Jamiah Uthmaniyyah, Hyderabad. He subsequently came to Sara-e-Mir, a town in Azamgarh, where he took charge of the Madrasa-tul-Islah ("School for {Muslim}Reform"), an institution based on the educational ideas of Shibli Numani and Farahi. Farahi had served as chief administrator of the school since its inception, but other engagements had until now kept him from becoming actively involved in its affairs.

From 1925, when he came to Sara-e-Mir, to 1930, the year of his death, Farahi devoted most of his time and energy to managing the affairs of the Madrasa-tul-Islah and teaching there. A few students-Amin Ahsan Islahi was one of them - received special training from him; they were supposed to become the bearers of his thought.

An erudite scholar, Farahi commanded knowledge of a number of languages, among them Hebrew and English. He learnt Hebrew from the German Orientalist Josef Horovitz (1874-1931) who was professor of Arabic at the Aligarh Muslim College Horovitz studied Arabic with Farahi.

Farahi's chief scholarly interest was the Quran, the focal point of all his writings. Most of his published works are in the form of notes that were later complied by his students. Among his books, besides the three already mentioned, are: Mufradat al Quran ("Vocabulary of the Quran"), Asalib al Quran ("Style of the Quran") Jamhara-tul-Balaghah ("Manual of Quranic Rhetoric") and Iman fi Aqsam il Quran ("Study of the Quranic Oaths).

His comprehensive Biography is Zikr-e-Farahi by Dr. Sherafuddin Islahi.