Arieli was born in Ashkelon in 1959, the seventh and youngest son of parents who were Jewish immigrants from Iran. Arieli played in different teams in the handball Premier League. In 1978, he enlisted in the IDF, volunteered for the paratroopers, and was accepted into the brigade's "Orev" company, where he underwent a training course as a combat soldier, a course for infantry commanders and a course for infantry officers. At the end of the course he returned to the company as a platoon commander. He continued to serve in the brigade's commanding positions. He was a company commander during the First Lebanon War, during which he was also wounded, and subsequently served in the South Lebanon security zone and First Intifada. He rose through the ranks, serving as commander of the paratroopers' "Orev" company, commander of a battalion at the paratroopers regiment's commander's course, commander of the paratroop brigade training base and deputy brigade commander. Arieli took part in a course for brigade commanders as commander of the northern brigade in Gaza, with the rank of Colonel. He served as Deputy Military Secretary to the Prime Minister and Minister of Defense (1997-1999), and headed the Administration for the Interim Agreement in the West Bank and as Head of the Administration for the Permanent Status Agreement. In 2001, he retired from the IDF.