Early life and background
Khan was born on 14 March 1965 in Mumbai to Tahir Hussain, a film producer, and Zeenat Hussain. Several of his relatives were members of the Hindi film industry, including his late paternal uncle, the producer-director Nasir Hussain. He has a relation to the cinema of Pakistan as well, being a relative of movie director Syed Sibtain Fazli (Allahabad, 1916-Lahore, 1985), and who's grandson, Umair Fazli, also a movie director, made the 2016 box-office success Saya e Khuda e Zuljalal, himself being the brother of Ayesha Fazli, the wife of singer-actor Ali Zafar of Pakistan. Outside the movie industry, he is also related to the Indian Islamic scholar, philosopher and politician Abul Kalam Azad through his grandmother. Khan is the eldest of four siblings; he has a brother, the actor Faisal Khan, and two sisters, Farhat and Nikhat Khan (married to Santosh Hegde). His nephew, Imran Khan, is a contemporary Hindi film actor.
As a child actor, Khan appeared on screen in two minor roles. At the age of eight, he appeared in a highly popular song in the Nasir Hussain-directed film Yaadon Ki Baaraat (1973), which was the first Bollywood masala film. The following year, he portrayed the younger version of Mahendra Sandhu's character in his father's production Madhosh. Khan attended J.B. Petit School for his pre-primary education, later switching to St. Anne's High School, Bandra until the eighth grade, and completed his ninth and tenth grade at the Bombay Scottish School, Mahim. He played tennis in state level championships, and became a state-level champion. He has professed he was "much more into sports than studies". He completed his twelfth grade from Mumbai's Narsee Monjee College. Khan described his childhood as "tough" due to the financial problems faced by his father, whose film productions were mostly unsuccessful. He said, "There would be at least 30 calls a day from creditors calling for their money." He was always at risk of being expelled from school for non-payment of fees.
At the age of sixteen, Khan was involved in the experimental process of making a 40-minute silent film, Paranoia, which was directed by his school friend Aditya Bhattacharya. The film was funded by the filmmaker Shriram Lagoo, an acquaintance of Bhattacharya, who provided them with a few thousand rupees. Khan's parents did not want him to make films, wishing that he would instead pursue a "steady" career as an engineer or doctor. For that reason, the shooting schedule of Paranoia was a clandestine one. In the film, he played the lead role alongside actors Neena Gupta and Victor Banerjee, while simultaneously assisting Bhattacharya. He said that the experience of working on it encouraged him to pursue a career in film.
Khan subsequently joined a theatre group called Avantar, where he performed backstage activities for over a year. He made his stage debut with a small role in the company's Gujarati play, Kesar Bina, at Prithvi Theatre. He went on to two of their Hindi plays, and one English play, which was titled Clearing House. After completing high school, Khan decided to discontinue studying, choosing instead to work as an assistant director to Nasir Hussain on the Hindi films Manzil Manzil (1984) and Zabardast (1985).