Racicot was born in Thompson Falls, Montana. His ancestors came to the Montana Territory in the 1860's. Marc's grandfather arrived in Libby in 1917 to work as a logging camp cook in northwestern Montana for J. Neils Lumber Company. Marc Racicot was born to Bill and Pat Racicot on July 24, 1948, in Thompson Falls. He was raised in Miles City and Libby. His parents owned a foster home. His father was also a teacher, high school basketball coach, and track coach. He graduated from Libby High School. Racicot received a bachelor's degree in English from Carroll College in 1970. He was a starting basketball player in high school as well as Carroll College. He earned a law degree in 1973 from the University of Montana in Missoula, Montana.
As an Army ROTC graduate, Racicot was immediately assigned as a prosecutor in the Army JAG Corps from 1973 to 1976. He was stationed in West Germany where he served as chief prosecutor for the largest U.S. military jurisdiction in Europe. While there, he also taught business and criminal law for the University of Maryland. After three years, he was discharged from the Army as a captain and returned to Montana in 1976.
He became the deputy county attorney for Missoula County from 1976 to 1977. After that, he became a special prosecutor for Montana statewide in 1977, and served in that position until 1988. During this time, he had a conviction rate of 95%. He lost only two cases in twelve years. He convicted Don and Dan Nichols, who both abducted Kari Swenson, an Olympic athlete, and murdered a would-be rescuer. In May 1985, Dan Nichols was sentenced to 20 years for kidnapping and assault. In September 1985, Don Nichols was sentenced to 85 years for kidnapping, murder, and aggravated assault. In 1980 he ran for chief justice of the Montana Supreme Court, but was unsuccessful. He also ran for district judge in Lewis & Clark County in 1982 and Broadwater County in 1984, but lost both elections.
In 1988, he ran for Attorney General of Montana. He defeated Democratic nominee Mike McGrath, the Lewis and Clark County Attorney, 52%-48%. He served in this position until 1993.
In 1992, incumbent Governor Stan Stephens declined to run due to health problems. Racicot decided to run and easily won the Republican primary by defeating Andy Bennett 69%-31%. He won every county in the state. He then competed with Democratic State Representative Dorothy Bradley of Bozeman. Both candidates called for a 4% sales tax, but differed on how to spend such a tax. Racicot defeated her 51%-49%, a difference of 10,980 votes.
In 1996 Racicot ran for re-election. He easily defeated Rob Natelson in the Republican primary, 76%-24%. He was challenged in the general election by long-time state State Senator Chet Blaylock. Polls showed that Racicot maintained a sizable lead over Blaylock during the campaign. A few weeks before the election however, Blaylock unexpectedly died of a heart attack on the way to a debate. Reluctantly, his little known running mate, Judy Jacobson continued the drive but had little time to launch her own campaign. Because the election was so near, the voting ballots could only be changed to show Jacobson running for both governor and lieutenant governor. In one of the largest margins in state history, Racicot defeated Jacobson, 79%–21%, winning every county in the state.
After working with the Montana State Legislature to eliminate the $200 million deficit in 1993, the Racicot Administration produced a $22.4 million budget surplus the year after. They used the surplus to cut taxes.
As governor, Racicot approved legislation that deregulated the utility sector in Montana. This legislation was sought by the Montana Power Company, the major utility supplier in the state. Following passage, the Montana Power Company divested itself of its utility operations and became a telecommunications company. The company filed for bankruptcy a few years later. The final result of this sweeping deregulation of Montana's utilities was a drastic rise in rates for most of the power customers in Montana. Workers with pensions from Montana Power were suddenly left without income.
On December 5, 2001, President George W. Bush announced that he would appoint Racicot, a strong Bush ally, to become the Chairman of the Republican National Committee. He was one of Bush's earliest supporters and was a very effective spokesman for the Bush campaign in the recount debacle. In addition, Racicot was Bush's first choice for U.S. Attorney General, but he took himself off the list for personal reasons. In order to be confirmed, he severed ties to lobbying organizations that were connected to Enron. On January 18, 2002 the 165-member RNC unanimously ratified Racicot.
Racicot was extremely successful as the Republican party performed very well in the 2002 midterm elections. Republicans took control the U.S. Senate, making Bill Frist the Senate Majority Leader. In the wake of the McCain-Feingold finance reform, the RNC raised a record-$250 million in soft money.
In January 2003, he decided to resign to become Chairman of Bush's 2004 re-election campaign. Bush appointed Ed Gillespie as the next Chairman of the RNC.
Racicot was the Chairman of Bush's re-election campaign from 2003 to 2004, the entire election cycle. He said of his job: "I'm just a utility infielder." Racicot called Bush's opponent, U.S. Senator John Kerry, "out of the mainstream" and dismissed all polls suggesting Kerry would win. He also said Kerry's "record on defense and intelligence funding is not defensible."
Bush won re-election to a second term, defeating Kerry 51%-48%.
An August 2013 Dateline NBC special contended that Racicot engaged in prosecutorial misconduct while serving as Montana special prosecutor in the case of Barry Beach and, thereafter, took part in an apparent cover-up. Racicot prosecuted Beach in 1984 for the murder of Kimberly Nees in Poplar, Montana. Dateline alleged that his prosecution took place under questionable circumstances, and that Racicot was on record as stating that a bloody palm print not belonging to Beach found at the scene of the murder was of "no probative value" to the case. The case against Beach relied entirely on a taped confession that was later erased, as well claims in open court that evidence existed that actually did not exist, such as a pubic hair that supposedly belonged to Barry Beach that was ruled inadmissible because a match could not be made and the hair could not be found in the evidence locker. No investigation of Racicot's prosecutorial misconduct has yet taken place despite evidence contamination and Mr. Beach's insistence that his confession had been coerced with a brutal interrogation and threats of execution. Barry Beach was sentenced to 100 years without the possibility of parole. Years of advocacy and journalistic investigation resulted in Montana Governor Steve Bullock signing an executive order granting Beach's request for clemency, and Beach was released on November 20, 2015 after serving more than 32 years.
Racicot served as President of the American Insurance Association (AIA), an insurance industry lobbying group from June 13, 2005 to February 1, 2009. He said "The AIA is widely regarded as one of the most effective business advocacy groups in state capitols and in the halls of Congress, and I am looking forward to beginning this next chapter of my career, and immersing myself in the industry challenges that must be resolved in the immediate future, such as extension of the national terrorism insurance program, as well as longer-term priorities, such as addressing lawsuit abuse and modernizing the industry's regulatory system."
He serves as a current board member for Jobs for America's Graduates and the Board of Visitors of University of Montana School of Law, and is a past member of the Board of Directors of the Corporation for National and Community Service, a division of which is AmeriCorps. He has also served on the Board of the Lewis & Clark County United Way, and is a past chairman of America's Promise – The Alliance for Youth, where his predecessor was former Secretary of State Colin Powell. He is a director of Massachusetts Mutual Life Association and a former partner at the Texas-based law firm Bracewell & Giuliani.