Otto Wilhelm Rudolf Caracciola was born on 20 January 1901 in Remagen, Germany. He was the son of Maximilian Caracciola His father wanted him to study at a university, but after his father's death, he became an apprentice at the Fafnir-Automobilwerke in Aachen.
He began racing in 1922, while he was working at the Fafnir-Automobilwerke. In 1923, he began working as a car salesman at Daimler-Motoren-Gesellschaft's Dresden sales outlet, and entered races with the Mercedes 6/25/40 hp racing car.
In 1926, Rudolf won the inaugural German Grand Prix, held at the Automobil-Verkehrs- und Übungsstraße (AVUS) track in Berlin. He used the prize money to set up a Mercedes-Benz dealership on the Kurfürstendamm in Berlin.
He won eleven races in 1927, and in 1928, he again won the German Grand Prix. In 1930, he won the Irish Grand Prix. He also closed his Mercedes-Benz dealership after the firm went bankrupt.
By 1932, Mercedes-Benz had completely withdrawn from motor racing, and Rudolf began racing for Alfa Romeo. In 1933, after Alfa Romeo had withdrawn from motor racing, Rudolf and his friend Louis Chiron formed their own team, Scuderia C.C. (Caracciola-Chiron). While practicing for the Monaco Grand Prix, three of his car's four brakes failed, and the car crashed into the wall. He began racing again in 1934. He won the European Drivers' Championship in 1935, 1937, and 1938.