Dallara graduated from the Politecnico di Milano with a degree in aeronautical engineering before joining Ferrari in 1960. After a year at Ferrari he moved to Maserati, and in 1963 was hired by Lamborghini as chief designer. At Lamborghini he worked alongside Paolo Stanzani and Bob Wallace to design the chassis of two landmark road cars: the Lamborghini Espada and the Lamborghini Miura, the latter widely credited as the car that defined the modern mid-engined supercar layout.
In 1969 Dallara left Lamborghini to design race cars for Frank Williams, then building his early Formula One operation. That same year he co-founded the Autodromo Riccardo Paletti, a racing circuit near Varano outside Parma.
In 1972 Dallara established Dallara Automobili in Varano. From 1974 the company designed a Formula One car, the Iso-Marlboro IR, for the Williams team, and simultaneously developed Formula 3 machinery that would go on to win championships in Italy, France, England, Switzerland, Germany, Japan, the United States, Russia, and Austria. Dallara's Formula 3 cars became the dominant force in the category for decades, making his name synonymous with the series worldwide.
In 1997 Dallara expanded into American open-wheel racing, supplying chassis to IndyCar teams. The effort produced numerous victories from 1998 through 2003, and since 2007 Dallara has served as the single chassis supplier for the entire IndyCar Series — a status reflecting both the quality and reliability the company had demonstrated over the preceding decade.
In the mid-1990s Dallara branched into Formula One projects. At the end of 1998 Honda, exploring a return to F1 as a constructor, commissioned Dallara to design a new F1 chassis. Honda ultimately cancelled the project before it raced. In 2000, following that cancellation, Dallara turned to a new project for French team Oreca in the Le Mans series.
In August 2004 Dallara was engaged by Alex Shnaider to build a chassis for the former Jordan team, which was then in transition toward the Midland identity. Gary Anderson was brought in to assist, but by mid-2005 Dallara had withdrawn from the project.
In 2009 Dallara and his team began constructing an F1 chassis for the new Campos Grand Prix entry, which would later race under the Hispania name before that project too evolved beyond his initial involvement.
Dallara's career arc — from Lamborghini road car chassis through Williams Formula One work to the standardisation of IndyCar machinery — reflects the breadth of expertise his company accumulated over half a century. His Formula 3 cars trained generations of drivers who would go on to race in the highest levels of the sport, and his IndyCar chassis underpinned the careers of countless American open-wheel racing champions. The Dallara name became among the most recognised in circuit racing engineering, valued by both championship-level professional teams and driver development programmes worldwide.