Rahal began his career in SCCA feeder categories, eventually finishing second to Gilles Villeneuve in the 1977 Formula Atlantic championship. The following year, he competed in the 1978 New Zealand Grand Prix with Fred Opert Racing (Formula Pacific) and in European Formula Three with Wolf Racing. Near the end of the season, Rahal raced for the Wolf Formula 1 team in the 1978 United States Grand Prix and the 1978 Canadian Grand Prix. The deal with Wolf did not continue into the 1979 season, as Wolf signed up James Hunt for the one and only car available. Rahal began the 1979 racing a Chevron in Formula Two, but returned to America mid-season and raced in the Can-Am series. During the next few seasons, he competed in various sports car events, including the 24 Hours of Le Mans and the IMSA GT Championship.