Larrousse and Calmels commissioned their first car from British constructor Lola, which produced the LC87, designed by Eric Broadley and Ralph Bellamy. The car was powered by a Cosworth DFZ V8 and entered in the normally aspirated class at a time when most front runners still used turbocharged engines. Philippe Alliot drove the sole entry in the team's debut season, with Yannick Dalmas joining later in the year. The two parties agreed to a three-year arrangement with Lola, and Chris Murphy was recruited from Zakspeed to assist Bellamy's engineering effort.
In September 1988, the team hired Gérard Ducarouge, formerly of Renault and Lotus, to strengthen its technical department. That same year the team negotiated a switch to Lamborghini V12 engines for 1989.
In the spring of 1989, Calmels was imprisoned after murdering his wife, and the team was renamed simply Larrousse. Alliot continued as driver, while Dalmas was dropped following illness and replaced initially by Éric Bernard and later by Michele Alboreto.
At the end of 1989, Larrousse sold half the team to Japanese corporation Espo, and the team relocated from Antony to Signes in the south of France, close to the Paul Ricard circuit. For 1990, Aguri Suzuki was signed alongside Bernard. That season proved to be Larrousse's strongest. Suzuki scored the team's only Formula One podium at the Japanese Grand Prix at Suzuka, finishing third in front of his home crowd, and the team placed sixth in the Constructors' Championship.
The achievement was complicated by a subsequent FIA investigation. The governing body found that Larrousse had registered the chassis as its own construction when in fact Lola had designed and built it in England. Although the team's points were officially removed, they were permitted to retain the prize money and travel benefits associated with their championship finish, and avoided the penalty of pre-qualifying for 1991.
Lamborghini switched its engine supply to Ligier ahead of 1991, and Larrousse signed Brian Hart for engines instead. Espo withdrew financial backing early in the year, increasing pressure on the team. Bernard and Suzuki ran in the midfield but rarely finished, and Bernard suffered a severe leg fracture in a qualifying accident at Suzuka, ending his season.
In late 1991, Gérard Larrousse sold 65 percent of the team to the French sports car manufacturer Venturi and hired Robin Herd to produce a new Formula One chassis. A fresh Lamborghini engine deal was agreed, and Bertrand Gachot and Ukyo Katayama were engaged as drivers. Gachot scored the team's only point of 1992 at Monaco, but the season was otherwise difficult and marked by a collision between the two drivers in Canada and again in Japan.
In September 1992, Venturi sold its stake to a group called Comstock, led by a figure named Rainer Walldorf, later identified as Klaus Walz, who was wanted for murder in multiple European countries. Walz was killed during a nine-hour armed standoff with police in Germany, leaving the team's ownership structure in chaos.
For 1993, Larrousse produced an in-house chassis for the first time, fielding Philippe Alliot and Érik Comas. Two points-scoring finishes were the total return. In 1994, with Lamborghini engines no longer available, the team switched to customer Ford HB units — significantly less competitive than the Ford Zetec-R used by front-running Benetton. Comas scored two sixth-place finishes during the year and Olivier Beretta joined the lineup, but the season was spent battling unreliability and dwindling finances.
A new car for 1995 was designed by Robin Herd but never built due to lack of funding. Merger discussions with DAMS, which held a Reynard-designed Formula One chassis, collapsed over the winter of 1994–1995. Efforts to secure French government support — partly on the grounds that the Loi Evin, banning tobacco and alcohol advertising, had stripped French teams of key revenue streams — failed. Ford refused to supply engines without payment, and former partners Patrick Tambay and Michel Golay pursued legal action against Larrousse in France.
The team announced its withdrawal from Formula One prior to the 1995 San Marino Grand Prix. A planned 1996 return never materialized, as Larrousse was tied up in litigation arising from the team's collapse. The closure was widely regarded as a significant blow to French motorsport, coming shortly after AGS had also shut its doors in 1991 and Ligier had passed into foreign ownership.
The team's history was marked by an unusual concentration of criminal events among its associates: the co-founder Calmels was convicted of murder, as was a subsequent major shareholder in Walzdorf/Walz. The team also played a tangential role in the 1994 refuelling controversy involving Benetton, notifying the FIA about a request from fuel rig manufacturer Intertechnique to remove a fuel filter from Larrousse's own equipment — information that became relevant in the investigation into Jos Verstappen's fire at the German Grand Prix.