Ali was born on the 13th of Rajab of the 30th year of the Elephant (A.D. 600). His cousin, Muhammad, was now 30 years old. Ali's parents were Abu Talib ibn Abdul Muttalib, and Fatima, the daughter of Asad, both of the clan of Hashim.
Ali was born inside the Kaaba in Makkah. The great historian, Masoodi, the Herodotus of the Arabs, writes on page 76 of Volume II of his book, Murooj-udh-Dhahab (The Golden Meadows), that one of the greatest distinctions that Ali enjoyed was that he was born in the House of Allah.Some of the other authorities who have affirmed Ali's birth in the Kaaba, are:

1.Muhammad ibn Talha el-Shafei in Matalib-us-saool, page 11.
2.Hakim in Mustadrak, page 483, Vol. III.
3.El-Umari in Sharh Ainia, page 15.
4.Halabi in Sira, page 165, Vol. I.
5.Sibt ibn al-Jauzi in Tadhkera Khawasil Ummah, page 7.
6.Ibn Sabbagh Maleki in Fusoolul Mohimma, page 14.
7.Muhammad bin Yousuf Shafei in Kifayet al-Talib, page 261.
8.Shablanji in Nurul Absar, page 76.
9.Ibn Zahra in Ghiyathul Ikhtisar, page 97.
10. Edvi in Nafhatul Qudsia, page 41.

Among the modern historians, Abbas Mahmood al-Akkad of Egypt writes in his book Al-'Abqarriyet al-Imam Ali, (Cairo, 1970), that Ali ibn Abi Talib was born inside the Kaaba.
Another contemporary historian, Mahmood Saeed al-Tantawi, of the Supreme Council of Islamic Affairs, Arab Republic of Egypt, writes on page 186 of his book, Min Fada-il al-‘Ashrat al-Mubashireen bil Janna, published in 1976 by Matab’a al-Ahram at-Tijariyya, Cairo, Egypt: "May God have mercy upon Ali ibn Abi Talib. He was born in the Kaaba. He witnessed the rise of Islam; he witnessed the Da’wa of Muhammad, and he was a witness of the Wahi (Revelation of Al-Qur’an al-Majid). He immediately accepted Islam even though he was still a child, and he fought all his life so that the Word of Allah would be supreme."

An Arab poet composed the following distich on the birth of Ali:
He (Ali) is the one for whom the House of Allah was turned into a maternity home; And he is the one who threw the idols out of that House; Ali was the first and the last child ever to be born in the Kaaba.
It was a custom of the Arabs that when a child was born, he was placed at the feet of the tribal idol or idols, thus symbolically "dedicating" him to the pagan deity. All Arab children were "dedicated" to the idols except Ali ibn Abi Talib. When other Arab children were born, some idolater came to greet them and to take them in his arms. But when Ali was born, Muhammad, the future Messenger of God, came into the precincts of the Kaaba to greet him. He took the infant into his arms,, and dedicated him to the service of Allah. The future prophet must have known that the infant in his arms was some day going to be the nemesis of all idolaters and polytheists and of their gods and goddesses. When Ali grew up, he extirpated idolatry and polytheism from Arabia with his sword.
Birth in Kaaba was one out of many distinctions that God bestowed upon Ali. Another distinction that he enjoyed was that he never adored the idols. This again makes him unique since all Arabs worshipped idols for years and years before they abjured idolatry and accepted Islam. It is for this reason that he is called "he whose face was honored by Allah." His face was indeed honored by Allah as it was the only face that never bowed before any idol.
Ali was the youngest child in the family. Of the three of his brothers, Talib and Aqeel, were many years older than him; Jaafer was ten years older. The birth of Ali filled the heart of the future Apostle with boundless happiness. The child was someone "special" for him. After all, Muhammad had many other cousins and they had their own children, and Ali himself had three elder brothers; but he didn't show any interest in any of them. Ali and Ali alone was the focus of his interest and love.
When Ali was five years old, Muhammad adopted him, and from that moment they were never to part with each other.
There is a story that once there was a famine in Makkah, and the surrounding areas, and Abu Talib, being in dire straits at the time, was finding it difficult to support a large establishment. It occurred to Muhammad that he ought to try to mitigate some of his uncle's burden of responsibilities, and was thus prompted to adopt Ali.
It is true that Muhammad adopted Ali but not for the reason stated above. In the first place, Abu Talib was not in such dire straits that he could not feed a child of five; he was a man of rank and substance, and his caravans plied between Hijaz and Syria or between Hijaz and Yemen. In the second place, feeding a child of five years would have hardly made any difference to a man who fed even strangers if they were hungry. Muhammad and Khadija adopted Ali after the death of their own sons. Ali thus filled a void in their lives. But Muhammad, the future prophet, also had another reason for adopting Ali. He picked out Ali to bring him up, to educate him, and to groom him for the great destiny that awaited him in the times to come. Dr. Taha Hussain of Egypt says that the Messenger of God himself became Ali's guide, teacher and instructor, and this is one more distinction that he enjoys, and which no one else shares with him (Ali).
About Islam it has been said that of all the universal religions, it is the only one which has grown in the full light of history, and there is no part of its story which is in obscurity.

Bernard Lewis
In an essay on Muhammad and the origin of Islam, Ernest Renan remarks that, unlike other religions which were cradled in mystery, Islam was born in the full light of history. "Its roots are at surface level, the life of its founder is as well known to us as those of the Reformers of the sixteenth century". (The Arabs in History, 1960,)

G. E. Von Grunebaum
Islam presents the spectacle of the development of a world religion in the full light of history. (Islam, 1969)
Similarly, it may be said that of all the friends and companions of Muhammad, the Prophet of Islam, Ali is the only one who grew up in the full light of history. There is no part of his life, whether it is his infancy, childhood, boyhood, youth, manhood, or maturity, that is hidden from the spotlight of history. He was the cynosure of all eyes from his birth to his death. On the other hand, the rest of the companions of the Prophet come to the attention of the student of history only after they accept Islam, and little, if anything, is known about them until then.
Ali was destined to become the right arm of Islam, and the shield and buckler of Muhammad, the Messenger of God. His destiny was inseparably linked with the destiny of Islam, and the life of its Prophet. He was present at every juncture in the history of the new movement, and he played the stellar role in it. It was, incidentally, a role that he alone could have played. He reflected the "image" of Muhammad. The Book of God itself called him the "soul" or the alter ego (a second self) of Muhammad in verse 61 of its third chapter, and paraded his illustrious name across the horizons of history.
In the years to come, the creative synergy of Muhammad and Ali – the master and the disciple – was going to place the "Kingdom of Heaven" on the map of the world.

Source:
A Restatement of the History of Islam and Muslims
CE 570 to 661
By: Sayed Ali Asgher Razwy