Son of Fateh Singh Ahluvalia, succeeded to the Ahluvalia chieftaincy on the death, in 1836, of his father. In his youth he was a favourite of Maharaja Ranjit Singh and was the recipient of the towns of Nur Mahal and Kalal Majra and other occasional bounties. Upon succession, however, he was subjected to a fee of 1,000,000 rupees. His younger brother, Amar Singh, who lived in Lahore, conspired to usurp the gaddi and was encouraged in his ambition by the Maharaja as well as by his minister, Dhian Singh. Nihal Singh had some respite after the death of Amar Singh in a boat accident in the Ravi.

In the first Anglo-Sikh war, his sympathies lay with the Khalsa Darbar. In spite of treaty obligations with the British, he afforded them little assistance. On the contrary, the Ahluvalia troops fought on the side of the Sikhs both at Baddoval and 'Alival. He was penalized by the British by the confiscation of his territories south of the Sutlej, yielding an annual revenue of 565, 000 rupees. Nihal Singh died on 13 September 1852.