Khoyski was born on in Shaki to the noble family of Isgender Khoyski, a colonel in the Russian Army. His great grandfather Jafar Qoli, the Khan of Khoy was defeated by the Iranian Fath-Ali Shah and with his 20,000 army retreated to Echmiadzin. In the 1804-1813 Russo-Persian war, Jafar Qoli Khan sided with Russian Empire and was therefore rewarded by tsar Alexander I by being appointed the Khan of Shaki Khanate and his rank was raised to lieutenant colonel. After receiving his school education at Ganja gymnasium, Fatali Khan studied at the Law Faculty of the Moscow University, from which he graduated in 1901. After the graduation, Khoyski worked as a court lawyer in Ganja, Sukhumi, Batumi, Kutaisi. Once he was appointed Assistant Prosecutor of Yekaterinodar county court, he began to be involved in socio-political activities.
On 28 May 1918, the republic dissolved and an independent Azerbaijan Democratic Republic was proclaimed. It was the first state ever in the Muslim world to function and be based on principles of republic government. Fatali Khan was put in charge of forming the first cabinet of the republic. Prime Minister Khoyski had the distinct honor to send radiogram to the main political centers of the world on the proclamation of an independent Azerbaijan republic on 30 May 1918. When the government moved to its temporary residence in the city of Ganja the government encountered serious challenges. Azerbaijani statehood came under fire. On 17 June, Fatali Khan announced the resignation of the government at the closed session of the National Council but he was assigned to form the government again. In addition to the post of prime minister, he was the post of justice minister in the second government. Khoyski served as the Chairman of Cabinet of Ministers and Minister of Internal Affairs. On 17 June 1918 the second government was formed by Khoyski led by Nasib Yusifbeyli. He played a significant role in making alliance with the Turkish government, defeating and removing the Centrocaspian Dictatorship from power in Baku as well as establishing diplomatic ties with other countries. On 22 December, he was elected as a foreign minister of the newly formed government. Khoyski protected the Azerbaijan's statehood in this post. Furthermore, he defended the independence of Azerbaijan by achieving the recognition of the independence of Azerbaijan at the Paris Peace Conference. He is also credited for establishing the Azerbaijan State University. During the period of the third government formed by Khoyski, he served as Chairman of the National Council and Minister of Foreign Affairs of Azerbaijan. During his term in office, he succeeded in removing the city names Elisabethpol and restoring the historic name of Ganja and renaming the Karyagino county to Jabrayil province, establishing a multi-party system, printing of Azerbaijani postage stamps and Azerbaijani currency Manat, founding schools and colleges teaching in Azerbaijani. In March 1919, the third government dissolved. In January 1920, when the Allied Powersde facto recognized Azerbaijan Democratic Republic, Council of Allied Powers, Georgy Chicherin, the Soviet Commissar for Foreign Affairs repeatedly mailed Khoyski asking him to open a new front to confront Anton Denikin and his White movement to which Fatali Khan gave negative responses saying ADR would not meddle into internal affairs of Russia. In his fourth last correspondence, Chicherin notified Khoyski about the upcoming invasion of the 11th Red Army of Azerbaijan. Khoyski moved his family to Tbilisi before the Bolshevik Red Army invaded Baku on 28 April 1920.
