Ahmed was born on 1 May 1940 in Munshiganj to Mohiuddin Ahmed. He studied economics at Dhaka University, where he obtained his BA and MA in 1960 and 1961, respectively, standing first in his class both times. He earned a master's degree in development economics from Williams College and a Ph.D. in economics from Princeton University in 1975. His doctoral dissertation was titled "Migration and employment in a multisector model; an application to Bangladesh." Ahmed started his career as a lecturer of economics in Dhaka University. Later, he joined the civil service of Pakistan. After the Bangladesh Liberation War, he served the civil service of Bangladesh until 1978. That year, he joined the World Bank, where he held various mid-level positions. On retirement from the World Bank, he took the post of Governor of the Central Bank of Bangladesh on 29 November 2001. His contract expired on 30 April 2005. He then became Managing Director of the Palli Karma-Sahayak Foundation, the country's apex micro-finance organisation, beginning on 1 June 2005.
On 12 January 2007, President Iajuddin Ahmed swore him in as Chief Adviser to the Interim Caretaker Government, after the former interim government under the President was dissolved. Fakhruddin Ahmed is credited with bringing an end to the anarchy that had threatened to sweep the troubled nation. In a country widely perceived as one of the world's most corrupt, Ahmed stressed an anti-graft campaign against the establishment during his tenure. More than 160 senior politicians, top civil servants, and security officials were arrested on charges of graft and other economic crimes. Included were former ministers from the two main political parties, the Awami League and the Bangladesh National Party, including former prime ministers Sheikh Hasina and Khaleda Zia, and the former acting prime ministerFazlul Haque. Ahmed fainted while giving a speech at a tree-planting event on 3 June 2007, apparently due to the heat, and was hospitalized. He was released from the hospital later the same day and has said that he was well. Following the elections in 2008, a new parliament was formed. On 6 January 2009, the interim government made way for an elected Awami League government, which had won a two-thirds majority. Ahmed has since retired from the public sphere and is now living in the United States.
