The son of a gardener, Alberoni was educated by the Jesuits, took holy orders, and in 1698 was appointed a canon at Parma, in Italy. In 1702 the government of Parma sent him on a diplomatic mission to Louis-Joseph, Duke de Vendôme, commander of French forces in Italy during the War of the Spanish Succession. Taken by Vendôme to France as secretary in 1706 and to Spain (1711), he nevertheless continued as an agent of Parma. After Vendôme's death (1712), Alberoni remained in Madrid, becoming the official representative of Parma the following year. He negotiated the marriage of Philip V of Spain to Elizabeth (Isabella) Farnese, daughter of the Duke of Parma. His influence at the Spanish court increased steadily, and by 1716 he was exercising the powers of a premier.

Alberoni continued the administrative centralization and fiscal reform begun by the French economist Jean Orry (Orry, Jean), who exercised considerable influence in the government of Spain during the first years of Bourbon rule there. He also encouraged the establishment of industry through tariff reform and the importation of foreign craftsmen. His outstanding achievement, however, was the diminution of the royal councils—centres of aristocratic opposition to reform—which he accomplished through a series of decrees in 1717. His foreign policy was designed to drive the Austrians from Italy and to safeguard Spanish trade with its American colonies. The Spanish military expeditions to Sardinia (1717) and Sicily (1718) that led to war with the Quadruple Alliance (Great Britain, France, Austria, and the United Provinces), which he regarded as premature, resulted from a policy imposed on him by the queen. The defeat of Spanish forces during the Franco-British invasion of Spain resulted in his banishment in 1719.

Alberoni fled from Spain to Italy, where (having been made a cardinal in 1717) he took part in the conclave that elected Pope Innocent XIII in 1721; he was later acquitted by a papal inquiry into charges brought against him by Spain. He became legate of Ravenna in 1735 and of Bologna in 1740.