Ali, playing only his 10th match, was brilliantly supported by seamers James Anderson (2-41) and Liam Plunkett (2-42) as the tourists made India struggle for runs here on Tuesday.
Tail-ender Harbhajan Singh (37) and skipper Rahul Dravid (34) were the main contributors in a below-par batting performance. India failed to bat their full quota of 50 overs.
India's plight could have been worse had Owais Shah not dropped Dravid at first slip off Ali when the batsman had not even opened his account.
England captain Andrew Flintoff's decision to put India in to bat after winning the toss paid handsome dividends as his fast bowlers jolted the hosts with early wickets on a lively track.
It was a combination of tight bowling and poor shot-selection that put India in trouble. Openers Virender Sehwag and Gautam Gambhir disappointed their home crowd when they fell playing one stroke too many early in the innings.
Sehwag, declared fit only on Monday after suffering from back spasms, attempted to pull a rising delivery from Anderson but mistimed it and was easily caught by Plunkett at mid-on.
Gambhir (25) hooked Ali for a six and them flicked him for a four before falling in the same over to a superb diving catch by wicket-keeper Geraint Jones, who held the ball low to his left.
Yuvraj Singh (one) inside-edged an Ali delivery on to his stumps while trying to drive it away from his body.
India's batting woes continued as Mohammad Kaif (four) was given run out by TV umpire Krishna Hariharan. His bat appeared to be in the air after he made a desperate diving attempt to regain the crease.
India were in disarray when well-set Dravid was bowled by Plunkett after making 34 with the help of seven fours.
Suresh Raina (24) and Irfan Pathan (28) steadied the innings with a 58-run stand for the sixth wicket, but their efforts were not good enough to help their team set a challenging target.
The pair eventually fell playing strokes, with Raina driving left-arm spinner Ian Blackwell straight to Paul Collingwood at wide mid-on and Pathan falling to a running catch at mid-off.
Harbhajan and Mahendra Dhoni (20) put on 55 for the eighth wicket before India were all out in the 47th over.