After witnessing a pogrom, his family moved to Germany and he was educated in Berlin, receiving his doctorate there in 1923.
As a student he was a cofounder of the German branch of the Zionist Socialist party Ha-Pocl Ha-Tzair and became the editor of its monthly, "Die Arbeit". He made his Zionist debut at a meeting in Carlsbad, where his knowledge of finances and economics shone. He was already seen as a brilliant mind, a rising star in Socialist-Zionist politics.
In 1924 he immigrated to Palestine.
In the 1920s he fulfilled a number of speaking and fundraising missions in Europe and the United States, where he impressed his audiences with his incisive presentations. Upon the foundation of the Labor Party, Mapai, he became one of its leaders and editor of its monthly.
In 1931 Arlosoroff was elected to the executive of the Jewish Agency, becoming the head of its political department in charge of foreign relations.
That year he traveled to Britain to help convince Prime Minister Ramsay Macdonald to rescind the 1930 White Paper, the statement of policy that for the first time made Jewish immigration to Palestine conditional on the absorptive capacity of that country. The mission was successful.
The rise of Hitler and Nazism alarmed him and in the final year of his life he was engaged in a scheme that called for the transfer of German Jewish assets and property to Palestine. At the time he reached the conclusion that the Jewish state would eventually emerge as a result of an armed struggle and not through a peaceful takeover by the Jews.
In June 1933, he was murdered while walking with his wife on Tel Aviv beach. This occurred at a time of violent controversies between the Labor movement and their ideological opponents, the Zionist Revisionists.
The two assassins were uni-dentified and there was widespread speculation that the motives were political. Two members of the Revisionist movement were arrested and charged with the crime. The defense claimed that the murder was the work of Arabs. At the trial one of the defendants was convicted and sentenced to death, but the verdict was overruled by a higher court for lack of corroborative evidence. The mystery was never solved, but for many years gave rise to speculation and continuing suspicions between the left wing and the right wing of the Zionist movement. A committee of enquiry in 1982, headed by a Supreme Court judge, concluded that there was no fresh evidence to shed new light on the case.
A noted orator and writer, he believed in popular socialism, opposing Marxism and its doctrine of class warfare. He attempted to link his brand of pragmatic socialism with constructive Zionism and called for more settlement and the slow creation of a Jewish infrastructure in Palestine to enable the Jews to make a claim at a later date for a future Jewish state. He supported the conciliatory policies of collaborating with the British authorities pursued by Chaim Weizmann.