Paoli was born in Monfalcone, but moved very early to Genoa.
After several different jobs, he was called by Ricordi with his friends Luigi Tenco and Bruno Lauzi. His first success was the single "La gatta."
Another early song was "Il cielo in una stanza" composed in 1959. According to Paoli, the lyrics had come to him while lying on the bed of a brothel. Looking at the purple ceiling, he thought, "Love can grow at any moment at any place". Mina`s single release of the song topped the list of annual sales in Italy and reached Billboard Hot 100. Video performances of the song were included in the movies "Io bacio... tu baci" and "Appuntamento a Ischia". Later it was featured in the "Goodfellas" movie.
This was followed by "Sapore di sale", arranged by Ennio Morricone. In the same year he attempted suicide by shooting himself in the heart.
In 1974 he returned with the LP I semafori rossi non sono Dio, followed by Il mio mestiere (1977). Both showed a more mature inspiration than his 1960s works. In the 1980s Paoli procuded a series of successful albums, and in 1985 he toured Italy together with Ornella Vanoni.
In 1987 he was elected to the Italian Chamber of Deputies for the Italian Communist Party. He abandoned politics in 1992 to pursue his music ambitions.