Ali Sabieh was a small village when the French created their French Somaliland. According to an old legend, the present-day territory of Ali Sabieh was covered by some trees, wadis and a well. Where the nomads use to stop here for water on their way to the towns of Zeila or Harar,and after signing the treaties in 1894 with the then ruling Ugaas of Issa Somali, to establish a protectorate in the region referred to as French Somaliland. Ali Sabieh became an administrative and commercial centre in the 19th century after the construction of the Ethio-Djibouti Railways, the first railway in French Somaliland. The railway reached this location on 14 July 1900. During this time, Ali Sabieh became the town that profited most from it and became a "boom city", attracting most of the trade. In 1904, a report notes that "when the border post of Ali Sabieh, it has the appearance of a fortress. Attached to the circle of "Gobad-Dikkil" from its inception in 1931, Ali Sabieh became the chief town of a circle autonomously 1939.

During World War II, Italy's declaration of war on France and Great Britain came on 10 June 1940. The Italians did undertake some offensive actions beginning on 18 June. From Harrar Governorate, troops under General Guglielmo Nasi attacked the fort of Ali-Sabieh, there was some skirmishing over the Ethio-Djibouti Railways. Between 1 and 10 July several clashes with the Italians took place at Ali-Sabieh and along the railroad. On 10 July when the government learned that the armistice was not yet put into effect in French Somaliland, President Philippe Pétain a collaborationist government at Vichy sent General Gaëtan Germain as his personal representative to correct the situation. Negotiations at Dewele, Italian East Africa on the local implementation of the armistice were only finally completed on 8 August. When the Italian invasion of British Somaliland the territory was completely surrounded on land by Italian possessions.

The Commander-in-Chief, East Africa, William Platt, codenamed the negotiations for the surrender of French Somaliland "Pentagon", because there were five sides: himself, the Vichy governor, the Free French, the British minister at Addis Ababa and the United States. Christian Raimond Dupont surrendered and Colonel Raynal's troops crossed back into French Somaliland on 26 December 1942, completing its liberation. The official handover took place at 10:00 p.m. on 28 December. The first governor appointed under the Free French was André Bayardelle. It was briefly attached to the Circle of Djibouti from 1946 to 1949, then again to that circle of Gobad-Dikkil, 1952 to 1958, and to regain its own administration from 1958 but in 1967 it was transformed into districts.

Following the conclusion of the 1977-1978 Ogaden War, Ali Sabieh, along with Dikhil, accommodated three quarters of the 8,000 Issa Somalis who had fled Ethiopia.

Ali Sabieh is the capital of the Ali Sabieh Region. It lies along National Highway 5.

Nearby towns and villages include Dikhil (50 km), Arta (69 km), Ali Adde (22 km), Assamo (24 km), Dewele (18 km), Dasbiyo (15 km), Holhol (33 km) and Guelile (10 km). Public buses go from Djibouti City to Ali Sabieh. It takes two hours to get to Ali Sabieh. A contracted bus ride from Djibouti city to Ali Sabieh can charge between 700 Djiboutian franc. Ali Sabieh's central location has contributed to its economic revival. Goods travelling to other parts of Djibouti all depart from the city's outskirts.

As of 2008^[update], the population of Ali Sabieh has been estimated to be 147,987. The city inhabitants belong to various mainly Afro-Asiatic-speaking ethnic groups, with the Issa Somali predominant. Ali Sabieh is the second largest cities of Djibouti after Djibouti city with about 250,547 residents.

Football and basketball are the most popular sports in Ali Sabieh. One of the football fields has a capacity of 1,500 spectators. It is home to the Djibouti Super Football League's Ali Sabieh FC.

Ali Sabieh economy today relies on tourism, agriculture and a number of small factories, most of which are involved in the building trade. Mobile telephone communications are provided mainly by Djibouti Telecom which have launched 3G and 4G services to their customers.

Various primary schools and nurseries are located in Ali Sabieh. There are several state-run and privately owned secondary and high schools in the town. The medium of instruction in both public and private schools is typically French, Arabic and with emphasis on English as a second language.

Healthcare in Ali Sabieh can be divided into two different sectors: public and private. Public hospitals in Djibouti were first built in the late 1901s and continued to grow with public health initiatives.

The town has many old quarters, with houses that are typically built with brown and black rocks, and mosques that are usually white washed and some has lost ground to more modern developments. For its famous landmark Ali Sabieh Mountain of national emblem of Djibouti symbol and for the Arrei Mountains highest point in Ali Sabieh region. The town hosts events to attract visitors to the town and its surroundings, including sporting events, shows, and singers.

Ali Sabieh is served by a station on the Addis Ababa–Djibouti Railway, which is located west of the town. In addition, there is a colonial-era station in Ali Sabieh for the Ethio-Djibouti Railways constructed by the French in 1897–1917 located in the town centre. The most frequently used public vehicles in the town are auto rickshaws (tuk-tuk). They travel on a number of routes serving nearly all of the town districts. Intercity bus services are also available, which connect Ali Sabieh to other major cities and towns across Djibouti, including Djibouti City, Dikhil and Arta.

Paved roads are available in Ali Sabieh, The vast majority of the roads were paved by the French, during colonial rule. The local government has repaired some of the roads but many others are still awaiting repair.

Ali Sabieh is located in a valley in the southern section of the country. The city is situated in a mountainous area, in an enclosed valley of the highlands. It sits at an elevation of 756 metres (2,480 feet) above sea level. Ali Sabieh is a mountainous and hilly town. This altitude gives the settlement and the surrounding area a milder climate than the Djibouti city coastal area, where the weather is typically hot. The city's layout is partially scattered and irregular. Houses are generally single storey and mostly cement made. To the east of Ali Sabieh is a grassland savannah, which attracts many types of wildlife to the area, including black-backed jackal, dorcas gazelle, Felis, caracal, various bird species, and the hamadryas baboon. The area attracts visitors looking for a moderate climate and pristine, scenic views.

Ali Sabieh is characterized by a hot semi-arid climate (Köppen climate classification BSh), with long, hot dry summers and mild winters. Ali Sabieh climate is largely defined by its geographic location.

The summer season in Ali Sabieh is moderately long, characterized by hot and dry and refreshing breezes with little rain, but relative humidity is generally low, making the heat tolerable. Average high temperatures are between 32 °C (90 °F) and 37 °C (99 °F) during summer months, and it can sometimes rise up to 40 °C (104 °F) during heat waves, and it can occasionally drop to below 19 °C (66 °F) at night. Winter usually sets in around the end of November, extending through early to mid-March. During the winter months, average low temperatures are between 15 °C (59 °F) and 16 °C (61 °F), and it can occasionally drop to below 12 °C (54 °F). There are two rainy seasons, the first rainy season extends from March to April and second from July to September. The average annual rainfall in Ali Sabieh is around 205 mm (8 in)

Elevation is the major factor in temperature levels. The highest recorded temperature was 40 °C or 104 °F on July 13, 2008, while the lowest recorded temperature was 12.5 °C or 54.5 °F on December 10, 1992.

• Aden Robleh Awaleh: Politician and president of the National Democratic Party (PND).
• Mahmoud Harbi: Politician
• Hussein Ahmed Salah: Djiboutian long-distance runner
• Aden Farah Samatar: Djiboutian musician
• Moumina Houssein Darar: Djiboutian Anti-Terrorism Police Investigator.
• Aicha Bogoreh: First lady of Djibouti
• Abdi Ibrahim (Bow Bow): Djiboutian musician
• Kadra Ahmed Hassan: Djibouti's Permanent Representative to the United Nations and the World Trade Organization.
• Nima Djama: Djiboutian musician
• Abdo Hamargod: Djiboutian musician

• Railway stations in Djibouti