Dagh was born in Chandni Chowk, Delhi, on 25 May, 1831. He was only four years old when his father, Nawab Shams-ul-din Khan was sentenced to death for his suspected involvement in the murder of Sir William Fraser, the then Resident of Delhi. Dagh moved from Delhi to Rampur by courtesy of one of his aunts who was a relation of the Nawab of Rampur. Later when Dagh's mother married Mirza Fakhru, son of King Bahadur Shah Zafar, Dagh entered the royal household where he was given the best of education and training, in arts and letters, in horse riding, and in martial arts. He became the poetic disciple of Sheikh Ibrahim Zauq, the king's preceptor, whose expert attention went a long way in digging out and developing his poetic talent. While in Delhi, he had the additional advantage of meeting and seeking the advice of Ghalib, who was also his relation. As a consequence,

Dagh soon became a distinguished poet of Delhi, specially notable for the simplicity, naturalness and musicality of his style. Mirza Fakhru died in 1856. Then came the mutiny of 1857 with its attendant terror and turmoil. In the changed circumstances, Dagh was compelled to return to Rampur, where, under the personal care and patronage of the Nawab, he led a comfortable life for nearly 30 years. 

After the death of the Nawab of Rampur in 1887, Dagh was left to fend for himself. For several years he wandered from pillar to post in search of livelihood. At last fortune smiled on him and the Nizam of Hyderabad appointed him as the poet of the court and as his poetic mentor on a handsome salary of Rs. 450 per mensem, which was later raised to Rs. 1,000. The Nawab also conferred on him several literary titles including: 
BuIbaI-e-Hindustan, Dal,ir-ul-Daula, Fasik-ul-Malik. This was, by 
all counts, the most glorious period of his life. Dagh died in Hyderabad of a paralytic stroke, on February 16, 1905. 
Dagh's poetic output consists of four Dewans, mainly of ghazals: Gulzar-e-Dagh, Aaftab-e-Dagh, Mahtab-e-Dagh, and Yaadgare-Dagh. He also wrote a masnavi, Faryad-e-Dagh and a few qasidas and rubaies. Dagh's distinctive merit as a poet lies in his linguistic felicity, his use of living Urdu idiom, and his mastery of metre and music. He lacks the philosophical mind of Ghalib, the mystic insights of Dard, and the pathos of Mir. But he has all the ingredients of a popular public poet: melody, accessibility, technical virtuosity, and a thorough familiarity with the universal theme of love and romance.