Chhota Rajan was born in Chembur in Mumbai in 1960, as Rajendra Sadashiv Nikalje. He began a career in crime by scalping cinema tickets at Sahakar cinema in Mumbai in his teens, in the company of one Rajan ir. Chhota Rajan also began to indulge in bootlegging. Chhota Rajan also met Yadagiri, a gangster from Hyderabad. Bada Rajan formed his own gang with Chhota Rajan as his main sidekick. The Rajan gang also operated protection money rackets and settled fincial and land disputes. Along with Tamilian don Vardarajan Mudaliar, the gang got into smuggling, spreading its tentacles around Mumbai.
After Bada Rajan's killing in 1983, Chhota Rajan took his place, formally assuming the title of Chhota Rajan. He worked for a time with D-Company don Dawood Ibrahim and Arun Gawli.
After Gawli's brother Papa Gawli was murdered over a drug deal, a rift developed between the trio. Chhota Rajan went to Dubai in 1989 to attend the wedding of Dawood's brother Noora, and never returned.
But Dawood Ibrahim and Chhota Rajan fell out in 1993 after the former masterminded the 1993 Mumbai blasts that killed over 300 people. Reportedly, Rajan tipped off India's R&AW about Dawood's network, creating a mortal enemy.