Nigel Bennett based the PC-23 on its predecessor, the PC-22, which had won the 1993 Indianapolis 500 and come within 8 points of the 1993 CART championship. The design philosophy was evolutionary rather than revolutionary: the most significant mandated change for 1994 was smaller rear wings on short ovals, required by new CART regulations. The Penske engineering team invested heavily in testing to minimise the aerodynamic penalties of those reduced wings. Plans to incorporate active suspension were abandoned after CART banned the technology. The car used the Ilmor Indy V-8 engine for the full CART season, while a specially developed alternative engine was commissioned for the Indianapolis 500 alone.
The most historically consequential aspect of the PC-23's 1994 campaign was the secret development of the Mercedes-Benz 500I pushrod engine for the Indianapolis 500. Beginning in the summer of 1993, Ilmor Engineering—under conditions of total secrecy—designed a purpose-built 209 cubic inch pushrod engine to exploit a perceived loophole in USAC's technical regulations, which had since 1991 permitted purpose-built stock-block pushrod engines with increased displacement (209.3 cid versus 161.7 cid for conventional turbocharged units) and higher turbocharger boost limits (55 inHg versus 45 inHg). Mercedes-Benz paid a fee to badge the engine as the 500I near the end of the development programme. The engine produced a reported 1,024 horsepower, an advantage of approximately 150–200 hp over the conventional V-8 field. The PC-23 required a taller engine cover to accommodate the 500I's geometry, and gearbox input gears were modified to handle the powerplant's lower rpm, higher torque output. The existence of the engine was revealed to the public only days before qualifying opened at Indianapolis.
Three Penske drivers shared the PC-23 during the 1994 campaign: Al Unser Jr., Emerson Fittipaldi, and Paul Tracy. The car debuted at the 1994 Australian FAI Indycar Grand Prix, where Fittipaldi finished second. At Phoenix, the opening oval round, the PC-23 took its first win, with Fittipaldi leading Unser Jr. home. Over the following weeks Penske recorded six consecutive victories—three for Unser Jr. (Long Beach, Indianapolis, Milwaukee), one for Tracy (Detroit), and two more for Unser Jr. (Portland, Cleveland). At Milwaukee the team swept the top three places, as they did again at Portland.
The Indianapolis 500 itself was dominated entirely by the 500I-engined Penskes. Unser Jr. and Fittipaldi lapped the field with 16 laps remaining before Fittipaldi made wall contact exiting Turn 4, handing Unser Jr. an uncontested victory. Rookie Jacques Villeneuve was the sole driver to finish on the lead lap behind the three Penskes.
After Toronto broke Penske's win streak, the team resumed dominance at Mid-Ohio and New Hampshire, both producing 1-2-3 finishes. Unser Jr. won in Vancouver to complete a second sequence of three consecutive victories. Road America was won by Villeneuve in his first CART victory, while Unser Jr. clinched the championship. Tracy won the final two rounds at Nazareth and Laguna Seca. The season total read 12 wins, 10 poles, and 28 podiums from 16 races, with Unser Jr., Fittipaldi, and Tracy finishing first, second, and third in the championship.
Penske Racing replaced the PC-23 with the PC-24 for the 1995 season, though a brief and unsuccessful attempt was made to qualify the year-old car at the 1995 Indianapolis 500. Bettenhausen Motorsports ran the PC-23 through most of the 1995 CART schedule with Stefan Johansson, who scored points in eight races and finished 13th in the standings. The PC-23 made its final competitive appearance at the inaugural U.S. 500 in 1996, with Gary Bettenhausen crashing out on lap 89.
The PC-23 stands as one of the benchmarks of open-wheel constructor dominance, comparable in statistical terms to the greatest single-season performances in the sport's history. The controversy surrounding the Mercedes-Benz 500I engine had consequences far beyond the 1994 Indianapolis 500: the episode is widely cited as a significant accelerant of the political tensions that ultimately produced the CART/IRL split in 1996. The car's story was documented in the 2014 book Beast by Jade Gurss, which detailed the secret development programme behind the pushrod engine.