Sultan Ali Iskandar Shah I ibni almarhum Sultan Ahmad Hussein Muazzam Shah I (Malay: سلطان علي اسکندر شاه اول ابن المرحوم سلطان احمد حسين معظم شاه اول) was the 20th Sultan of Johor, who succeeded his father, Sultan Hussein Shah after the latter died of natural causes in 1835. Over the next twenty years, Sultan Ali's claim to being the Sultan of Johor was only recognised by some merchants and a few Malays. Like his father, Sultan Ali was a puppet monarch and played a minimal role in the administrative affairs of the state, which came under the charge of the Temenggong and the British. In 1855, Sultan Ali ceded the sovereignty rights of Johor (except Kesang in Muar) to Temenggong Daeng Ibrahim, in exchange for formal recognition as the "Sultan of Johor" by the British and a monthly allowance. Following the secession of Johor, Sultan Ali was granted administrative charge over Muar until his death in 1877, and in most administrative matters, was often styled as the "Sultan of Muar".

Tengku Ali succeeded his father in 1835 as the Sultan of Johor, but was not recognised as the Sultan of Johor for the first few years of his reign. A proclamation by the British colonial government in September 1840 granted him the right as the legitimate heir as his father's successor, but not amounting to recognition as the "Sultan of Johor".

In the 1840s, Johor began to receive the first Chinese settlers (mainly immigrants from Swatow and Chaozhou). The young Temenggong, Tun Daeng Ibrahim, took up the administrative tasks of the state. He imposed taxes on these settlers, which went to the Temenggong's charge. However, unlike the Temenggong, Sultan Ali was unwilling to involve himself with the affairs of the state but at the same time complained about receiving an insufficient allowance from the British. He was well known for his penchant for an extravagant lifestyle, and had accumulated considerable debts by the 1850s.

Meanwhile, loyalty among the local Malays in Johor to the ruling classes became increasingly divided between the royalty and the nobility. In 1852, Thomas Church, the Resident Councillor of Singapore, summed up the situation of the Malays along the east coast of the Malay Peninsula:

In this neighbourhood, there are two parties, on one side, the Sultan of Lingga, the Sultan of Trengganu, and the young princes of Johore; on the other, the Raja Bendahara of Pahang, and the Temenggong Sri Maharaja.

Nevertheless, there was no major hostility as a result of the division of loyalty between the royalty and the nobility. In the same year, an English merchant, W.H. Read, controlled Sultan Ali's royal seal in exchange for a promise to liquidate his debts. Read had been an active supporter of Sultan Ali's goal of being recognized as the Sultan of Johor and gaining control of the state's revenue, with the Temenggong as his vassal. As a result of economic and political pressure from these traders, the Governor did consider granting formal recognition to Sultan Ali as the legitimate ruler of Johor, but in the process, he received a strong protest from Temenggong Daeng Ibrahim and his young son, Abu Bakar.

By the early 1850s, Johor was effectively under the control of the Temenggong; followers who attempted to act in Sultan Ali's interests were quickly expelled by force by the Temenggong's followers.

A series of negotiations between Sultan Ali and the Temenggong ensued with the British colonial government acting as the intermediary, after Sultan Ali had questioned the Temenggong's right to keep the state revenue to himself. Initially, the Temenggong proposed to split the trade revenue of Johor on condition that Sultan Ali surrendered his claim of sovereignty over Johor. The proposal was declined by Sultan Ali. Both parties agreed to seek the direct intervention of the British government, among which, the British Governor of the Straits Settlement, Colonel William John Butterworth, and his successor, Edmund Blundell were roped in to act as meditators.