Khoei continued to live in Najaf, becoming a teacher for the remainder of his life, and overseeing the studies of scholars who would be qualified to issue fatwas based on Shia theology.

In the 1970s, Grand Ayatollah Mohammed Shirazi, a radical theologian based in Karbala had a long-running feud with Al Khoei and his fellow clerics in Najaf over the legitimacy of theocratic rule.

[5] After the Persian Gulf War, Khoei was arrested by Saddam Hussein during the mass Shia uprising that followed the defeat of Iraqi forces.

The following are some of the institutions he established: He was also the patron of about 1,000 grant-maintained students of theology from Iraq and other countries like Lebanon, Iran, Syria, Persian Gulf States, India, Pakistan, Afghanistan, South East Asia.

He provided financial support for maintaining the schools including boarding expenses, teachers' salaries, and lodging costs.

"[8] The degree of success of his articulation of moderate Shia politics in Iraq have been said to be "in no small part traceable to the legacy of his mentor and teacher", Khoei.

[11] Although enthusiasm was passionate in the Shi'i world for the Iranian Revolution in its early years, Khoei "openly urged followers to ignore" Khomeini[12] and "kept alive" the tradition of Shia thought "that accords more leeway to the idea of distinguishing between religious and political authority" then and "did so" until enthusiasm for Islamist rule had lost much of its "allure" among Shia worldwide.