Fernandes was born to an Indian father of Goan origin and a mother of mixed Indian and Asian-Portuguese descent. He was educated at The Alice Smith School in Kuala Lumpur and from age 12 attended Epsom College boarding school in England, subsequently graduating from the London School of Economics with a degree in accounting.
He worked briefly with Virgin Atlantic as an auditor before joining Richard Branson's Virgin Communications in London as financial controller from 1987 to 1989. He then joined Warner Music International London, rising to become Vice President for ASEAN at Warner Music South East Asia.
In October 2001, following an introduction through a former Malaysian government official, Fernandes met then-Prime Minister Mahathir Mohamad, who suggested he buy an existing airline rather than start from scratch. Fernandes mortgaged his home and used personal savings to acquire AirAsia — then a heavily indebted subsidiary of the government conglomerate DRB-Hicom — for one ringgit, approximately 26 US cents. The airline came with two Boeing 737-300 aircraft and debts of US$11 million.
Within a year the airline had broken even and cleared its debts. Its November 2004 IPO was oversubscribed by 130 per cent. Fernandes credited timing as a key factor: after the September 2001 attacks, aircraft leasing costs fell 40 per cent and experienced airline staff were available following industry layoffs. He expanded the model through joint ventures in Thailand and Indonesia, lobbied successfully for open skies agreements across Southeast Asia, and built AirAsia into the region's dominant low-cost carrier.
In February 2020, Fernandes stepped aside as CEO during a probe into Airbus bribery allegations; he was reinstated a month later after Britain's Serious Fraud Office cleared him of any wrongdoing.
Fernandes founded a Formula One team that debuted in 2010 as Lotus Racing, raced under the Team Lotus name in 2011, and subsequently operated as Caterham F1 Team. The entry was one of three new teams admitted to the grid for 2010 as part of an expansion of the field.
On 16 December 2009, Fernandes accepted a well-publicised wager from Virgin Racing owner Richard Branson: the losing team's boss would work a day on the winner's airline dressed as a cabin crew member. Fernandes won; Branson eventually honoured the bet in May 2013 after a series of delays.
The team competed at the back of the field across its years of existence, never scoring a championship point. On 2 July 2014, Caterham F1 was sold to a Swiss and Middle Eastern consortium, ending Fernandes's direct involvement. Caterham Racing, the GP2 team Fernandes also created, was sold separately in October 2014 to Teddy Yip Jr., who relocated it to Silverstone and merged it with Status Grand Prix.
Fernandes also acquired Caterham Cars on 27 April 2011, taking ownership of the British sports car manufacturer. He retained the Caterham Group until 2021.
Fernandes became majority shareholder of Queens Park Rangers FC on 18 August 2011, buying Bernie Ecclestone's 66 per cent stake shortly after the club returned to the Premier League following a 15-year absence. He was named chairman of QPR Holdings Ltd. The club was relegated at the end of the 2011-12 season, returned to the Premier League in 2014-15, was relegated again, and remained in the Championship through his tenure. On 10 July 2023 it was announced Fernandes held no further shares in QPR Holdings.
Fernandes was appointed Commander of the Order of the British Empire (CBE) by the United Kingdom in 2011 and received France's Commander of the Legion of Honour in 2017. Malaysia conferred the rank of Tan Sri on him through the Order of Loyalty to the Crown in 2011. Forbes valued his net worth at US$335 million as of 2020.