Grönholm's father, Ulf "Uffe" Grönholm, was an active rally driver in the late 1970s and early 1980s, winning the Finnish championship twice before being killed during a practice run for Hankiralli on 25 February 1981 in Kirkkonummi. Marcus was 13 at the time. In his teens, Grönholm favored motocross before a serious knee injury prompted a switch to rallying.
He spent most of the 1990s in bit-part WRC roles, most notably with Toyota driving Celicas and Corolla WRCs. He was widely considered a late-bloomer, not becoming a factory driver until his early thirties. A string of exceptional stage times during a single day at Rally Finland as a privateer attracted offers from Ford, Toyota, and Peugeot; he chose Peugeot, who entered the WRC as championship newcomers for 1999.
After an engine failure at the 2000 Monte Carlo Rally opener, Grönholm took his first championship win in Sweden with the Peugeot 206 WRC. Subsequent victories — including at his home event, Rally Finland — were enough to claim a shock first title ahead of Subaru's Richard Burns at Rally Great Britain. He won his second title in 2002 after a difficult 2001 championship defense hampered by mechanical problems.
In 2003, Peugeot retained the aging 206 under heavy Marlboro sponsorship. Grönholm secured three wins but crashes and reliability failures limited him to sixth in the championship. Peugeot introduced the 307 WRC for 2004, but the car was plagued by gearbox and power steering failures all season. Grönholm's sole win came in Finland; he ended the year fifth overall. For 2005, Peugeot switched from Michelin to Pirelli, a decision that cost the team pace against Loeb's Citroën-Michelin combination. Grönholm took two wins — Finland and Japan — but retired from three consecutive season-closing rallies and finished third overall, level on points with Petter Solberg. Peugeot withdrew from the WRC at the end of 2005.
Grönholm joined Ford for 2006 driving the new Focus RS WRC. He opened the season with his first career tarmac victory at Monte Carlo — beating Loeb by over a minute on the road — and added a second win in Sweden. He traded victories with Loeb in Greece and Finland, but a retirement on the penultimate round in Australia extinguished his title challenge and Loeb won by a single point. Ford did clinch the manufacturers' championship.
The 2007 season brought another near-miss. Grönholm won in Sweden, Greece, Finland, and New Zealand — the New Zealand victory over Loeb by just 0.3 seconds, the closest margin in WRC history at that time. He led the championship by ten points with five rounds remaining, but crashes in Japan and Ireland swung the lead back to Loeb. A second-place finish at Wales Rally GB was not enough, and Grönholm ended the season as runner-up for the second year running. On 14 September 2007, he announced his retirement, stating he wanted to stop while still capable of winning, rather than lingering too long.
Grönholm entered five rounds of the FIA European Rallycross Championship in 2008, qualifying on pole and winning his debut in Höljes, Sweden, in front of 23,400 spectators. In 2011 and 2012, he competed in the American Global RallyCross Championship in a Ford Fiesta. A career-ending injury during practice at X Games Los Angeles 2012 brought his competitive driving to a close.
He made brief WRC returns: the 2009 Rally Portugal in a Prodrive Subaru (retiring after a Saturday crash), the 2010 Rally Sweden in a Ford Focus RS WRC (finishing 21st after technical problems), and the 2019 Rally Sweden in a Toyota Yaris under the GRX Team banner.
Grönholm won the 2002 Race of Champions, taking the Henri Toivonen Memorial Trophy and the "Champion of Champions" title. In 2006, he and Heikki Kovalainen formed Team Finland at the Race of Champions and won the Nations' Cup.
Grönholm lives in Ingå, Finland, with his wife Teresa and their three children. His son Niclas Grönholm competes in the FIA World Rallycross Championship. Grönholm and his long-time co-driver Timo Rautiainen are brothers-in-law. He is the cousin of Sebastian Lindholm, who also competed in the WRC.
Grönholm's two championships ended Tommi Mäkinen's four-year Mitsubishi dynasty and demonstrated that a driver could arrive at the very top of the WRC well into his thirties. His 30 career victories and back-to-back runner-up finishes in 2006–2007 — each lost to Sébastien Loeb by the narrowest of margins — defined him as one of the most competitive rally drivers of his generation.