Karl Benz's company, Benz and Cie., entered a single Benz in the 1894 Paris–Rouen, considered the world's first motor race, where it finished fourteenth. In 1908 Benz scored second and third places at the French Grand Prix behind the winning Mercedes entry. The company also built the Blitzen Benz, a record-breaking car that reached 228.1 km/h (141.7 mph) in 1911, a speed faster than any other vehicle of the era including trains and planes. After the First World War, Benz licensed the Rumpler Tropfenwagen design and introduced the mid-engine layout to Grand Prix motorsport at the 1923 Italian Grand Prix at Monza before merging with Daimler-Motoren-Gesellschaft in 1926.
The Mercedes Simplex of 1902, built by Daimler-Motoren-Gesellschaft, was the first purpose-built production race car and dominated racing for several years. The DMG Mercedes 18/100 GP won the 1908 French Grand Prix and the July 1914 French Grand Prix, finishing first, second, and third in the latter. In Sicily, Daimler won the Targa Florio twice — in 1922 with Giulio Masetti driving a pre-war car painted red to blend with Italian entries, and in 1924 with Christian Werner. Rudolf Caracciola won the inaugural 1926 German Grand Prix at AVUS as a privateer in a modified Mercedes GP car.
When new Grand Prix regulations for 1934 restricted dry weight to a maximum of 750 kg with no engine size limit, Daimler-Benz committed to a factory racing programme supported in part by the German government. The resulting cars, along with Auto Union's competing designs, appeared in silver and were soon nicknamed Silver Arrows. Starting with the Mercedes-Benz W25, the cars grew progressively more powerful through the 1935 Grand Prix season to the 1937 Grand Prix season, when the Mercedes-Benz W125 produced over 600 hp. Rudolf Caracciola became European champion in 1935, 1937, and 1938. For 1938 revised regulations limited engines to three litres, but the new Mercedes-Benz W154 and its successor maintained the team's pace. In 1939 Mercedes built the tiny W165 in just eight months specifically to contest the Tripoli Grand Prix under Voiturette rules — and won. Alfred Neubauer managed the team throughout this period.
Mercedes-Benz returned to racing after the Second World War in 1952 with the gull-winged W194 300 SL, managed again by Alfred Neubauer. The car won several races that year including the 24 Hours of Le Mans and the Carrera Panamericana. In 1955 the Mercedes-Benz 300 SLR, derived from the W196 Formula One car, competed in the World Sportscar Championship. The season was overshadowed by the Le Mans disaster, in which a 300 SLR became airborne and crashed into spectators, killing more than eighty people. Mercedes won the remaining rounds and the Manufacturer's championship but withdrew from all motorsport at the end of the year.
In 1985 Mercedes returned to the World Sportscar Championship as an engine supplier for Sauber. The Sauber C9 won multiple races including the 24 Hours of Le Mans and the World Sports Prototype Championship in 1989, and the successor C11 dominated the 1990 season. In 1997 the CLK GTR, built by AMG, won both the teams' and drivers' championships in the FIA GT Championship in its debut season and repeated the feat in 1998.
Mercedes-Benz returned to Formula One in 1954 with the technologically advanced W196, which was run in both open-wheeled and streamlined bodywork configurations. Juan Manuel Fangio, transferring mid-season from Maserati, gave the team an immediate debut victory at the 1954 French Grand Prix alongside Karl Kling in a one-two finish, and went on to win the drivers' championship that year. The 1955 season brought further dominance, with Fangio and Stirling Moss winning six of nine rounds between them and taking first and second in the championship. Mercedes also won the 1955 World Sportscar Championship before withdrawing from all competition at the end of the year, a decision widely linked to the Le Mans disaster.
Mercedes returned to Formula One in 1994 as an engine supplier to Sauber. From 1995 the Mercedes-Benz-Ilmor V10 moved to McLaren. The partnership produced Mika Häkkinen's back-to-back drivers' championships in 1998 and 1999 and the constructors' title in 1998. Lewis Hamilton won the drivers' championship for McLaren-Mercedes in 2008 by a single point. The partnership ended at the close of the 2014 season after twenty years, though McLaren returned as a Mercedes engine customer from 2021. Lando Norris and McLaren went on to win the drivers' and constructors' championships in 2025.
In November 2009 Mercedes purchased 75 per cent of Brawn GP, the reigning constructors' champion. The renamed Mercedes GP debuted at the 2010 Bahrain Grand Prix with Nico Rosberg and Michael Schumacher. With Lewis Hamilton joining the team, Mercedes won eight consecutive Formula One World Constructors' Championships from 2014 to 2021, the third-highest total in Formula One history, along with seven drivers' championships.
In 1994 Al Unser Jr. won the Indianapolis 500 in a Penske car powered by a purpose-built Ilmor pushrod engine badged as Mercedes-Benz. The engine exploited a rules loophole for production-based pushrod engines and delivered a significant power advantage, though the loophole was closed immediately afterwards. From 1995 Mercedes entered the CART IndyCar World Series full-time, achieving eighteen wins and one runner-up finish in the championship before withdrawing at the end of the 2000 season.
Mercedes-Benz entered the DTM touring car series from 1988 with AMG-prepared cars and maintained a factory presence until withdrawing at the end of the 2018 season to join the FIA Formula E Championship. As the Mercedes EQ Formula E team, the operation won both the drivers' and teams' championships in the 2020–21 and 2021–22 seasons with Stoffel Vandoorne and Nyck de Vries before selling the team to McLaren.
Mercedes participated in international rallying in the late 1970s and early 1980s with 280E and 450 SLC 5.0 cars. In 1977 a pair of W123 280Es finished first and second in the London–Sydney Marathon. In the 1978 Vuelta a La América del Sud, Mercedes scored a 1-2-3-4-5 finish. Despite strong results on long-distance events suited to the cars' durability, the heavier Mercedes models struggled against more nimble European competitors on tarmac and the works programme was disbanded by the end of 1980.