Posey's father, Lieutenant Samuel Felton Posey, was killed when a kamikaze struck his ship, USS Henrico, during the Battle of Okinawa. His remains were never recovered. Posey grew up in Sharon, Connecticut on his grandfather's estate near Lime Rock Park, and received his first driving lessons in a Mercedes-Benz 300 SL purchased for him at age fourteen. He took early racing instruction from his neighbor John Fitch. In 1966 he earned a Bachelor of Fine Arts in painting from Rhode Island School of Design — a credential that would shape his later career as commentator and artist.
Posey began as an amateur sports car racer before stepping up to national competition. In 1968 he drove the Sunoco Camaro for Roger Penske in the Trans-Am Series alongside lead driver Mark Donohue. Donohue won ten of thirteen races, with the Penske team securing the championship for Chevrolet. Posey's best result that season was second at Watkins Glen — the only race in 1968 in which Donohue was beaten by a Camaro. In 1969 Posey won the Lime Rock Trans-Am in a factory Ford Mustang.
In 1970, Posey drove for Ray Caldwell's Autodynamics team in a factory-backed Dodge Challenger, competing against Parnelli Jones, Dan Gurney, Mark Donohue, and Jim Hall in what many racing historians regard as the greatest season of professional road racing in United States history.
Posey's USAC Championship Car career spanned the 1969 and 1972–1974 seasons, totalling 13 career starts including the 1972 Indianapolis 500. His best single-event finish was third at the 1969 Kent road course. At the 1973 Indianapolis 500, his entry was disqualified after USAC Technical Director Frank DelRoy discovered that the team had disguised their already-qualified car as a different vehicle in order to attempt another qualifying run.
Posey appeared ten times at the 24 Hours of Le Mans — in 1966, 1969 through 1973, and 1975 through 1978 — finishing in the top ten on five occasions. His best Le Mans result was third in 1971 driving a Ferrari 512M. He won the 1975 12 Hours of Sebring sharing the car with three co-drivers.
Posey participated in two Formula One World Championship events: the 1971 and 1972 United States Grand Prix, both at Watkins Glen, driving Surtees cars. He retired from the 1971 race and finished twelfth in 1972, scoring no championship points.
Posey debuted as a racing analyst for ABC Sports at the 1974 Indianapolis 500. Over the following years he served as pit reporter and stepped into the analyst role when Jackie Stewart was unavailable. From 1982, as Stewart reduced his workload, Posey returned permanently to the booth, becoming ABC's first-choice analyst by 1986.
At the 1986 Indianapolis 500, with a late yellow flag out near the end of the race, Posey used a two-way radio to ask an impromptu question to race leader Kevin Cogan. Cogan replied that he was "a little busy now." On a restart with two laps remaining Bobby Rahal jumped Cogan to win the race. Posey's comment — "I wouldn't want to talk to me either" — became one of the memorable asides of American motorsport broadcasting.
Alongside the Indy 500, Posey provided commentary for the CART/PPG Indy Car World Series with Paul Page and Bobby Unser from the late 1980s through 1995. In 1989, ABC brought Posey into its Tour de France broadcast team, where his knowledge and enthusiasm for cycling surprised many viewers. He anchored the 1990 and 1991 Tour de France broadcasts for ABC, and also worked play-by-play for luge at the 1984 Winter Olympics in Sarajevo and the 1988 Winter Olympics in Calgary. Posey moved to Speedvision in 1996 and later narrated Formula 1 montages for NBC Sports Network from 2013 to 2017.
Since 1995, Posey has lived with Parkinson's disease, which has limited his activities in later years. He is the author of Playing With Trains, a book on model railroading, and The Mudge Pond Express, an autobiography centered on his racing career. He is also an accomplished painter and architect. In 2013, the front straight at Lime Rock Park was renamed the Sam Posey Straight in his honor. He was inducted into the Motorsports Hall of Fame of America in 2016.