Malhar Rao Holkar was from Dhangar community. He was born on March 16, 1693, at Holi village near Khandji Holkar in Jejuri, Pune district. His father died in 1696 when he was only three years old. Malhar Rao in the palace of his uncle, Sardar Bhojrajrao Bargal, Taloda (Nandurbar district). His uncle organized a cavalry force led by the Maratha aristocratic Sardar Kadam Bande. Bargal asked Malhar Rao to join his cavalry and soon thereafter he was appointed in charge of the cavalry contingent. He married his uncle's daughter Gautam Bai Bargal (D. 29 September 1761) in 1717. He also married Bana Bai Sahib Holkar, Dwarka Bai Sahib Holkar, Harku Bai Sahib official, Khanda Rani.

The official lived at a time when it was possible for ambitious people to improve their standing considerably and in 1715 he was serving in the forces under the control of the move bande in Khancountry. Adopting a mercenary approach to service at that time, the official was a part of Delhi's campaign organized by Balaji Vishwanath in 1719, fought against the Nizam in the Battle of Balapur in 1720, and served with the King of Barwani.

In 1721, after becoming disillusioned with the bandman, the official Peshwa became a soldier in the service of Bajirao. A diplomatic role was played after participating in the Campaign of Peshwa, which led to a dispute with the state of Bhopal. The official was holding the command of the Army of 500 men in 1725 and in 1727 he received a grant so that he could retain the troops in different areas of Malwa. The successful work during the Battle of Palkhed of 1728, during which he disrupted the supply and communication of the Mughal armies, further enhanced his position. Peshwa improved as a counter to the perceived threat from less loyal supporters and by 1732, when Peshwa gave him a large chunk of western Malwa, the official had command of the cavalry of several thousand men.

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