It is shown here that the peculiar properties of AE Aqr can can be accounted for if the mass transfer from an evolved 0.7M⊙ secondary K4-5 star (qi ≈ 0.8, i.e. < 1) initiated when the orbital period of the binary was Porb,i ≈ 8.5 hours and the white dwarf period P*,i ≈ 1 hour. This resulted in a significant amount of orbital angular momentum being accreted by the white dwarf in an initial discless spin-up phase towards P* ≈ 0.1 Porb,i. This destabilized the mass transfer, resulting in a run-away mass transfer from the secondary that lasted for approximately 104 years, with the orbital period evolving to Porb ≈ 11 hours until a critical mass ratio of qcrit = 0.73 had been reached. In this phase the mass transfer from the secondary occurred at a rapid rate of approximately Ṁ2 ≈ 1020 g s-1, resulting in an accretion disc which spun-up the white dwarf to a period of approximately P* ≈ 33 s. For all q ≤ qcrit = 0.73 the mass transfer proceeded on the thermal time scale of the secondary star, i.e. at a much slower rate, resulting in the binary converging and forcing AE Aqr into the propeller phase. Applying stellar wind theory, this allow an estimate of the polar magnetic field of the secondary star, which is of the order of B° ≈ (1600 – 2000) G. It has been shown here that the duration of mass transfer phase q = qcrit → 0.67 (now) lasted for approximately tṀ2 ~ 107 years, similar to the spin-down time scale of the white dwarf, tsd = P*/P* ≈ 107 years. The propeller ejection of matter in the current phase results in the dissipation of mhd power of Lmhd ≈ 1034 erg s-1, probably channeled into mass ejection and non-thermal activity. This explains the non-thermal outbursts that are observed in radio wavelengths, and occasionally also in TeV energies, from AE Aqr.