The league is organized into a council, special committees, and a permanent secretariat; the secretariat has its headquarters in Cairo. The constitution of the league provides for coordination among the signatory nations on education, finance, law, trade, and foreign policy, and it forbids the use of force to settle disputes among members. A joint defense treaty was signed in 1950. In 2005 an Arab Parliament was established; its members are drawn from each member nation's parliament. The issues the parliament may discuss, however, are restricted to the social, economic, and cultural spheres.

Among the most important activities of the Arab League have been its attempts to coordinate Arab economic life; efforts toward this aim include the Arab Telecommunications Union (1953), the Arab Postal Union (1954), and the Arab Development Bank (1959, later known as the Arab Financial Organization). The Arab Common Market was established in 1965 and is open to all Arab League members. The common market agreement provides for the eventual abolition of customs duties on natural resources and agricultural products, free movement of capital and labor among member countries, and coordination of economic development.

In 1945, the league supported Syria and Lebanon in their disputes with France and also demanded an independent Libya; in 1961, it supported Tunisia in a conflict with France. The league early announced opposition to the formation of a Jewish state in Palestine and demanded that Palestine as a whole be made independent, with the majority of its population Arab. When the state of Israel was created in 1948, the league countries jointly attacked it, but Israel resisted successfully. The league continued to maintain a boycott of Israel and of companies trading with Israel. The summit conferences of 1964-65 established a joint Arab military command, which proved unsuccessful in implementing a united strategy for the liberation of Palestine. Egypt's membership was suspended from 1979 to 1989 because of its treaty with Israel, and the league's headquarters were moved to Tunis. In 1988 the league endorsed the PLO's plan for a negotiated settlement with Israel, and in 1991 Cairo once again became its headquarters. In 2002 the league for the first time offered Israel normal relations with Arab countries if it met certain conditions, but many of those conditions were not acceptable to Israel.

For many years, closer political unity among members was hampered by a division between pro-Western member countries and neutralist or pro-Soviet ones; more recently the division has been between militant Islamic fundamentalists and Arab moderates. The league ultimately supported Iraq in the Iran-Iraq War (1980-88) but was divided over the Iraqi invasion of Kuwait in 1990 (see Persian Gulf War). In 1993 the league issued a statement condemning all forms of terrorism.