Topalov was born in Rousse, Bulgaria. His father taught him to play chess at the age of eight. In 1989 he won the World Under-14 Championship in Aguadilla, Puerto Rico, and in 1990 won the silver medal at the World Under-16 Championship in Singapore. He became a Grandmaster in 1992. Topalov has been the leader of the Bulgarian national team since 1994. At the 1994 Chess Olympiad in Moscow he led the Bulgarians to a fourth-place finish. Over the next ten years he won a number of tournaments, and ascended the world chess rankings. As early as 1996, he was being invited to "supergrandmaster" events for the world's elite.
Topalov's loss to reigning Classical World Champion Garry Kasparov at the 1999 Corus chess tournament is generally hailed as one of the greatest games ever played. Kasparov later said, "[During the game] He looked up. Perhaps there was a sign from above that Topalov would play a great game today. It takes two, you know, to do that. In the knockout tournaments for the FIDE World Chess Championship, he reached the last 16 in 1999, the quarter-finals in 2000, the final 16 in 2001, and the semi-finals in the 2004 tournament. In 2002, he lost the final of the Dortmund Candidates Tournament (for the right to challenge for the rival Classical World Chess Championship) to Peter Leko.