Rustom Kaikhushru Irani was born on 4 July 1898 in Ahmednagar, the elder son of Kaikhushru Sarosh Irani (known as Khansaheb) and Gulmai Irani. His younger brother was Adi K. Irani (Adi Sr.), and his sisters were Piroja and Dolly. He studied at Bharda New High School in Bombay and at St. Xavier's and Sydenham Colleges. Through his mother Gulmai, the family came to Meher Baba, and Lord Meher records that Gulmai, her husband and their children dedicated their lives and property to his cause.
Rustom was with Baba at Manzil-e-Meem in Bombay in 1922. A publishing company named Circle & Company was formed under his legal aegis to publish Upasni Maharaj's biography, and he and Vajifdar walked all over Bombay selling copies. In early 1923 Baba asked Daulatmai whether she would marry her daughter Freiny (Piroja), Mehera's sister, to Rustom, and the couple were betrothed at the Manzil. They were married in Ahmednagar on 9 May 1923. They had six children: Mehlu, Falu, Meheru, Naggu, Behram and Jangoo; of these, Meheru was later chosen to join the women mandali.
Although Rustom lived with his family in Ahmednagar, he was under Baba's orders and handled supplies for the new colony at Meherabad. With Adi he met the material needs of Meherabad despite the hostility of most of their relatives and the local Zoroastrian community. In 1925 he was named vice-superintendent of Meherabad under Behramji, and in 1927 Baba gave him the title Barra Saheb (Big Boss), manager of the mandali. In the spring of 1928 Baba sent him to England to bring English boys to the Meher Ashram. No boys came, but in London he met Meredith Starr, and Sadhu Christian Leik later wrote that Baba had sent Rustom to England to establish a connection with the West.
Rustom was an energetic businessman. He opened a Nasik branch of the family's Sarosh Motor Works, where Baba had former ashram boys and several mandali employed. In January 1931 he founded the Meher Film Company, and on 28 February 1931 Baba opened Rustom's new cinema in Nasik, the Circle Cinema. In August 1931 Rustom sailed with Baba, Chanji and Aga Ali on the SS Rajputana for Baba's first journey to the West. Answering accusations against him in 1932, Baba explained that his close disciple Rustom had dedicated the cinema and motor garage to him so that the income could be used for his work. In 1935 Baba met him in Shanghai and sent him to New York and Hollywood as his representative for the film project with Norina Matchabelli and Elizabeth Patterson.
Rustom's own film was completed in 1938. According to Meher Baba Travels it was titled "The Perfect Man" (Nigah-e-Kamil), produced by Circle Pictures, with Rustom as director, producer, writer and lead actor, and Baba attended its premiere at the Circle Theatre in Nasik. Lord Meher records that the opening box-office receipts were disappointing, but Baba consoled and encouraged him.
His last years with Baba were troubled. Freiny suffered a mental breakdown, and in March 1939 it was settled that Rustom would go to an undisclosed place known only to Baba. Lord Meher says that Rustom was suffering much mental anguish and would disappear from time to time; in 1939 he disappeared permanently and was never again seen or heard from by his family or the mandali, although he wrote to Baba a few times. Meher Baba Travels states that he went into the Himalayas and gives his death as 1940, a date Lord Meher does not record. In 1954 Baba told Rustom's son Falu: "Your father had so much love and so much sacrifice for me. He is seeing me again physically through your form."