Carano was born in San Pedro, California, and attended Earl Wooster High School in Reno, Nevada. He later became the starter at quarterback for the University of Nevada, Las Vegas (UNLV).
In 1974, Carano helped UNLV achieve a number two ranking in Division II, after the school completed their one and only undefeated regular season. They would lose 49-11 to the University of Delaware in the Grantland Rice Bowl, one win from playing for the national championship.
In 1976, Carano completed 148 of 277 passes for 2,075 yards and 13 touchdowns, while leading his team to the Division II Midwest Regional quarter-final and a number seven national ranking. In his college career, Carano completed 337 of 636 passes for 5,095 yards and 37 touchdowns.
In 1989, Carano was inducted into the UNLV Athletics Hall of Fame. In 2015, Carano was inducted in the Southern Nevada Sports Hall of Fame.
In the 1977 NFL Draft the Dallas Cowboys didn't have a second round draft choice, after trading three of them to the Seattle Seahawks as part of the package to acquire Tony Dorsett. On May 3, the Cowboys traded wide receiver Duke Fergerson to the Seahawks in exchange for the 26th position in the second round, used to select Carano.
From 1977 to 1979, he was the third-string quarterback behind Roger Staubach and Danny White. In 1980, Carano was named the backup after the retirement of Staubach.
Carano is perhaps best remembered for replacing the injured White in the 1981 Thanksgiving game against the Chicago Bears and helping the Cowboys to a 10-9 come-back win. The next game would be the only start in Carano's NFL career, in which he completed 7 of 18 passes for 51 yards in a 37-13 win against the Baltimore Colts. Notably, the opposing quarterback for the Colts, David Humm, was also making his first and only NFL start, the only time in NFL history two "one and done" quarterbacks have ever faced off. Carano and Humm were the subjects of an NFL Films piece entitled "My One and Only", recounting the 1981 game. The piece noted that the two quarterbacks had been friends since high school (both played high school football in Nevada), and remain friends to this day.
In 1982, Carano was passed on the depth chart by Gary Hogeboom for the backup quarterback role behind White.
On December 1, 1983, Carano signed with the Pittsburgh Maulers of the United States Football League where he completed 53.7% of his passes for 2,368 yards, 13 touchdowns and 19 interceptions in the 1984 season. The next year owner Edward J. DeBartolo, Sr. folded the team, after the USFL announced that they would be switching to a fall schedule in 1986.
Carano has served on the Nevada Athletic Commission, the Reno-Sparks Convention & Visitors Authority Marketing Committee, the Board of Directors for the Airport Authority of Washoe Country, and the Board of Directors for Boys & Girls Club of Truckee Meadows. He is married to Lamise Carano and has three daughters, Kasey, Gina and Christi. Gina is a television personality, retired mixed martial arts fighter, actress and fitness model. His father, Donald L. "Don" Carano, was a hotelier in Nevada.
He is currently the General Manager of Silver Legacy Resort Casino, Eldorado Resort Casino and Circus Circus Hotel Casino in Reno, Nevada.