Bettenhausen was born in Blue Island, Illinois, and raised in Tinley Park, Illinois, graduating in 1962 from Bremen High School in Midlothian. His father, Tony Bettenhausen Sr., was a celebrated IndyCar and sprint car competitor whose legacy cast a long shadow over all three racing sons. Brother Merle suffered a serious injury in a crash that cost him an arm, while brother Tony went on to race in CART and build a career in team ownership. Gary began racing midget cars in the early 1960s and steadily moved through the USAC ladder.
Bettenhausen established himself in USAC midget competition during the late 1960s, finishing third in the national points standings in 1967. He was a winner of the prestigious Turkey Night Grand Prix in both 1967 and 1970, and claimed victory at the Astro Grand Prix in 1972, an event held at the Houston Astrodome. He also won the Hut Hundred in 1976. His career USAC midget total reached 27 wins, cementing his status as one of the more successful drivers in that category. He was inducted into the National Midget Auto Racing Hall of Fame in 1998.
Bettenhausen won the USAC sprint car championship in both 1969 and 1971. He extended his versatility to Silver Crown competition, winning the USAC Dirt Track championship in 1980 and again in 1983. His sprint car career was interrupted by a serious crash at a Championship Dirt Car race in Syracuse, New York on July 4, 1974, in which he sustained injuries that crushed and paralyzed his left arm. He regained enough mobility to continue driving but never fully recovered from the damage. He was inducted into the National Sprint Car Hall of Fame in 1993.
Bettenhausen competed in Champ and Indy-style cars from the mid-1960s through 1996. He made 21 starts at the Indianapolis 500, contesting every edition from 1968 through 1982 with the exception of 1979, when he failed to qualify, and then returning for further starts from 1986 to 1993. His best result at Indianapolis came in 1980, when he finished third after starting 32nd in a 33-car field.
The 1972 Indianapolis 500 represented his closest approach to outright victory. Bettenhausen led 138 of the 200 laps and appeared set to win, but suffered a blown engine with 24 laps remaining and was classified fourteenth. It remained the dominant individual performance of his Indianapolis career without a winning result.
In the 1991 Indianapolis 500, Bettenhausen recorded the fastest qualifying lap of the weekend at 224.468 mph. Because his time was set on the second day of qualifying rather than the first, the procedural rules of the era meant that Rick Mears, whose speed of 224.113 mph had been set on day one, retained the pole position. Bettenhausen nevertheless earned recognition as the quickest man that year.
Over his Champ Car career he recorded six USAC Indy Car race victories.
Bettenhausen also made eight career starts in the NASCAR Winston Cup Series, recording four top-ten finishes. His best result was a fourth-place finish at the 1974 Motor State 360 at Michigan International Speedway.
Gary Bettenhausen's career illustrated the breadth of American open-wheel racing across the USAC era. Competing in midgets, sprint cars, Silver Crown machinery, and Championship Cars simultaneously, he accumulated championships and race wins in multiple disciplines while managing the weight of his family's storied name. His 21 Indianapolis 500 starts and his 1991 qualifying speed speak to his longevity and pace at the top level of American racing. He died on March 16, 2014, in Monrovia, Indiana.