Racan was born on 24 February 1944 in Ebersbach, Germany.
He graduated from the Zagreb Law School in 1970.
In the period between 1972 and 1982 he was a member of the presidency of the Central Committee of the Communist Party of Croatia, while Croatia was a republic within the then Socialist Yugoslav federation.
From 1986 to 1989 Racan was a member of the presidency of the Central Committee of the Yugoslav Communist Party.
In December 1989 he was elected president of the Croatian Communist Party's Central Committee and announced multiparty parliamentary elections.
Racan will be remembered for his open opposition to and conflict with Slobodan Milosevic and the Serbian nationalistic leadership in the Socialist Federal Republic of Yugoslavia at the congress of the Yugoslav Communist Party in Belgrade in January 1990.
Leaders of the Croatian and Slovene Communist parties walked out of the Belgrade congress in protest over Milosevic's policy.
In 1990, Racan organised the first democratic elections in Croatia and saw to a peaceful transfer of power to the election winner, the Croatian Democratic Union (HDZ). After that, Racan was an opposition leader for a decade.
In 1990 he also reformed and renamed his party the Party of Democratic Changes, the acronym of which in Croatian was SKH-SDP. A year later the party began operating under the name the Social Democratic Party (SDP).
At parliamentary elections in 1992 and 1995 he won a seat in the Croatian Sabor.
In August 1998, Racan signed a coalition agreement with Drazen Budisa, the leader of the Croatian Social and Liberal Party (HSLS), on cooperation at elections in early 2000.
The SDP-HSLS coalition won those elections and another four parties joined the coalition.
After the 27 January 2000, ballot Racan became Prime Minister and mended Croatia's weakened relations with the international community. His government opened a new page in Croatia's relations with the West.
In 2001, Croatia and the European Union signed a Stabilisation and Association Agreement (SAA) and these first contractual relations between Zagreb and Brussels were a significant step forward on Croatia's road to the European bloc.
Racan used to say that his mandate was rendered more difficult due to attacks and criticism both from left and right wing parties.
The coalition government's performance was also marked by occasionally strained relations between coalition parties and by the then Opposition's attacks over Racan cabinet's cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY).
However, the new government led by the HDZ that won the November 2003 parliamentary elections continued conducting a majority of the projects launched during Racan's term in office as premier.
After a defeat at those parliamentary elections, Racan remained at the helm of the SDP and was a parliamentarian in the Sabor.
Under a 2005 decision of the Sabor, Racan became chairman of the parliamentary National Committee for Monitoring Croatia's Accession Negotiations with the European Union.
On 11 April 2007 Racan resigned as SDP President due to his deteriorated condition.
On 29 April, he died in the Rebro hospital after his condition worsened, with recent examinations revealing new brain metastases. In the last few months he was treated in hospitals in Munich and Zagreb after he was diagnosed with ureter cancer.