Dallara studied aeronautical engineering at the Politecnico di Milano and entered the automotive industry immediately after graduation. He joined Ferrari in 1960, then moved to Maserati the following year. In 1963, Lamborghini hired him as chief designer, where alongside Paolo Stanzani and test driver Bob Wallace he contributed to two of the most celebrated Italian supercars of the era: the Lamborghini Espada and the Lamborghini Miura, the latter widely credited with establishing the mid-engine layout as the template for high-performance road cars.
In 1969, Dallara began designing race cars for Frank Williams, the founder and manager of what would eventually become one of Formula One's most successful constructors. That same year, Dallara co-founded the Autodromo Riccardo Paletti circuit in Varano, near Parma, a facility that became integral to Italian motorsport development.
In 1972, Dallara founded Dallara Automobili in Varano. From 1974, the company designed a Formula One car, the Iso-Marlboro IR, for Williams, marking one of the team's earliest chassis partnerships before Williams developed full in-house capability.
Following the Williams work, Dallara's company concentrated on building customer racing cars to Formula Three regulations. The results were comprehensive: victories in national championships across Italy, France, England, Switzerland, Germany, Japan, the United States, Russia, and Austria established Dallara as the benchmark Formula Three constructor globally. The company's reputation for reliable, technically correct chassis made it the default choice for teams and series organizers seeking a level competitive platform.
In 1997, Dallara expanded into IndyCar racing, and from 1998 to 2003 the company's chassis accumulated numerous victories. In 2007, Dallara became the sole chassis supplier for the IndyCar Series, a position it has maintained since, supplying all teams with the same specification tub while competitors differentiate through aerodynamic bodywork kits.
Dallara returned to Formula One involvement in the mid-1990s with BMS Scuderia Italia, supplying the chassis under the Dallara name for several seasons. At the end of 1998, Honda approached Dallara to design a chassis for a potential return to Formula One as a constructor; the project was ultimately cancelled. From 2000, following that cancellation, Dallara worked on a Le Mans prototype for French team Oreca. In 2004, Alex Shnaider engaged Dallara to build a chassis for the team that would race as Midland F1 (inheriting the Jordan entry), with Gary Anderson brought in to assist; Dallara withdrew from that project by mid-2005. In 2009, Dallara designed an F1 chassis for Campos Grand Prix, the new entry that later became known as Hispania Racing.
Dallara's engineering philosophy — rigorous aerodynamics, weight discipline, and a consistent preference for correct solutions over expedient ones — gave him influence disproportionate to the public profile of any single car he designed. His work on the Miura helped define what a supercar was; his IndyCar and Formula Three chassis have launched the careers of hundreds of professional racing drivers. The Dallara Automobili headquarters in Varano has evolved into a museum and technical center, recognizing the company's role not just as a manufacturer but as an institution in Italian motorsport culture.