Ratebzad was born in Guldara in Kabul province to a Pashtun father and Tajik mother. Her father, Ahmad Rateb Baqizada, nephew of Mohamad Tarzi and cousin of Queen Soraya Tarzi, was the editor in chief of Naseem-e-Sahar, and strong advocate of the Amani Reforms. This led to his forced exile to Iran under the ruling period of Nader Khan. Ratezbad and her brother grew up without their father under poor conditions. She was married off at the age of 15 to Dr. Keramuddin Kakar, one of the very view foreign educated Afghan surgeons of the time. Ratebzad had attended the francophone Malalaï Lycée in Kabul. She received a degree in nursing from the State University of Michigan, School of Nursing from 1950-1954. As Kabul University's Medical School allowed women to enrol for Medicine, she belonged to the first batch and graduated in 1962.
Her political involvement led to estrangment between her and her husband, Dr. Keramuddin Kakar, who did not approve of her political views and activities as he was considered loyal to Zahir Shah. Ratebzad moved out of their marital house in 1973. Though they never divorced officially, they lived separately and avoided contact. They had three children, one daughter and two sons. Only her daughter followed her political path and became a member of People's Democratic Party of Afghanistan (PDPA), her sons remained critical of her political activities and decisions.
Ratebzad was one of the first publicly outspoken social and political Afghan-women activists in the late 50s and most of 60s in Afghanistan. She was also part of the first ever Afghan-women delegation representing the Kingdom of Afghanistan on international stage. This was the Asian Women's Conference in Ceylon, 1957.
As veiling became optional during the tenure of Daud Khan as prime minister, Ratebzad led a group of female nurses in 1957 to Kabul's Aliabad Hospital to attend male patients. This marked the uncovering of women's faces for working purpose in urban Afghanistan. However, this and other events to follow led to her defamation in conservative circles of Afghan society.
She became involved in leftist politics and, along with Khadija Ahrari, Masuma Esmati Wardak, and Roqia Abubakr, was one of the first four women elected to Afghan parliament in 1965. Then in 1965, Anahita Ratebzad helped found the People's Democratic Party of Afghanistan (PDPA). Ratebzad hailed from the Parcham faction of PDPA. Her political views on women's right and her marxist political ideology made her a very controversial figure especially among other political parties and forces. Her close association with Babrak Karmal, the leader of the Parcham faction, brought her the label of "Karmal's mistress", some incorrect sources even counted him as her husband.
Ratebzad found the Democratic Organisation of Afghan Women ( DOAW) in 1964 and contrary to common believe this organisation was not a component of PDPA as it had non-marxist and non-leftist members, and did not follow a specific political ideology. Rahnaward Zaryab, scholar, novelist, literary critic and a strong critic of the PDPA regime wrote in 2013 " DOAW was an organisation founded in the 1340s (1960s CE) which was not foreign funded or supported. The members of the organisation were intellectual women volunteering to promote and work for women's rights on their own initiative". Comparing DOAW with present-day women's rights organisations inside Afghanistan, he added "they lack the outreach and effectiveness of DOAW ". However, after the Saur Revolution of 1978 the organisation came under the supervision of the PDPA governmental. During the Khalq faction's power seizure it was headed by Dilaram Mahak from 1978-1979. After the power seizure by the Parcham faction, Ratebzad was elected as the chairwoman of DOAW at DOAW's general assembly in 1980.
Ratebzad along with other members of DOAW organised a protest march on 8 March 1965 in Kabul marking the first celebration of International Women's Day in Afghanistan.
In the days leading to the Saur Revolution/ Coup d'état on 28–29 April 1978, Ratebzad was detained under house arrest in her apartment in Macroraion, while Karmal, Panjsheri , Taraki and Saleh Mohammad Zeary were imprisoned and other PDPA prominent members (Khalq and Parcham) had gone underground. As the Khalq wing of PDPA seized power and Taraki became President, she was appointed as Minister of Social Affairs. She served at the post for four months. The two factions of Khalq and Parcham soon fell out again and prominent parchamites, including Ratezbad were appointed as ambassadors. Ratezbad served as ambassador to Belgrade (1978–1980). She was dismissed from her post as Hafizullah Amin came to power and ordered all parchamite ambassadors to come back to Afghanistan including, Karmal, Mahmood Baryalay, Najibullah, Nur Mohammad Nur and Abdull Wakil . After the Soviet invasion of Afghanistan and power seizure by the Parcham wing she was appointed as Minister of Education (1980–1981) and became permanent member of the PDPA's Politburo. In this position she had the responsibility of overseeing several Ministries, including Higher and Vocational Education, Information and Cultural, and Public Health.
After Karmal was replaced by Najibullah in 1986, who aimed at distancing himself from his leftist past and marxist rhetoric upon Soviet advice, Ratebzad was discharged of her posts and withdrew from the politburo. She was replaced as head of DOAW by Firuzah Wardak.
After 1986 she remained in Afghanistan until May 1992. Ratebzad and some members of her family were forced to escape the Mujahideen in-fighting. She fled to New Delhi, India, where she remained under the protection of the Indian Government. In 1995 she left for Sofia, Bulgaria and a year later after seeking political asylum, settled in Lünen, Germany. Ratezbad died of kidney failure at the age of 82. Her remains were taken back to Afghanistan and were buried in Kabul's Shohada-e-Sa'alehin.
Ratebzad wrote the May 28, 1978 New Kabul Times editorial which declared: "Privileges which women, by right, must have are equal education, job security, health services, and free time to rear a healthy generation for building the future of the country ... Educating and enlightening women is now the subject of close government attention ".