Mahmood's grandfather, Lal Khan Janjua, emigrated from Rawalpindi in Pakistan to England with his family in 1968. The family settled in Halliwell, a residential area of Bolton. Mahmood was born in Bolton, Greater Manchester on 21 December 1981, the son of Shahid Mahmood, and grew up with his family. He has a sister and two brothers and is first cousin to boxer Amir Khan. Khan is five years younger than Mahmood and the two cousins stay close, having grown up living near to each other.

Mahmood began playing club cricket in the Bolton Leagues, and played well enough to be signed by Lancashire in 2002. He made his debut for Lancashire in 2002 whilst on a scholarship with the club.

He won the NBC Denis Compton Award in 2003; in the same year, he inadvertently broke the hands of Lancashire team-mate Andrew Flintoff and England A team-mate Alex Gidman, an early indicator of his pace. In September 2003, Mahmood was one of England 14 cricketers selected to train with the England Cricket Board's National Academy during the winter.

Despite having taken only six first-class wickets, Mahmood was chosen for England A's tour to India and Malaysia in 2003–04.

In a County Championship match against Kent, Mahmood suffered a chest injury that threatened to prematurely end his 2008 season.

On 26 November 2008, Mahmood was drafted into England's squad for the last two ODI matches against India in their seven match tour. He and bowler Amjad Khan were called up as replacements for the injured Stuart Broad and Andrew Flintoff. Mahmood and Khan were in Bangalore with England's Performance Programme Squad. The final two ODIs were cancelled after the November 2008 Mumbai attacks and the England squad returned home due to safety concerns. Mahmood was part of the England Lions for the winter tour of New Zealand. While Khan debuted for England over the winter, Mahmood did not feature in any matches for the full England side. Despite this, he was selected in England's 25-man performance squad, and was identified by national selector Geoff Miller as being close to playing for England. Although he was part of England's 30-man preliminary squad for the 2009 ICC World Twenty20, he did not make the final squad of 15.

In April, Mahmood was selected to represent the England Lions against the West Indies. Despite being overlooked by England for the first Test of the summer, in May Mahmood secured his career-best bowling figures and his maiden 10-wicket haul. In a Lancashire victory over Worcestershire by six wickets, Mahmood took 6/75 and finished with match figures of 10/140. Mahmood was one of several Lancashire bowlers unable to play in August 2009. He, Glen Chapple, Steven C