Prema began competitive operations in 1984 by joining the Italian Formula 3 Championship, which served as its primary proving ground throughout the early years. Its first wave of notable alumni included future touring car star Fabrizio Giovanardi, multiple Le Mans winner Rinaldo Capello, and Formula One World Champion Jacques Villeneuve. Further Italian Formula 3 titles followed in 1990 with Roberto Colciago, 1998 with Donny Crevels, and 1999 with Peter Sundberg.
In 1988 the team made its first international appearance at the Macau Grand Prix, a prestigious street race in which Prema would remain a regular entrant for decades. From 2000, Prema expanded into Formula Renault, winning both the Formula Renault 2000 Eurocup Team Championship and the Italian Formula Renault 2000 title with Ryan Briscoe in 2001. Kamui Kobayashi won the 2005 Italian Formula Renault 2000 Championship with the team.
Prema entered the Formula 3 Euro Series in 2003 and won the inaugural edition with Briscoe. After a lean period in the mid-2000s, the team rebounded by claiming the 2011 and 2012 series titles with Roberto Mehri and Daniel Juncadella respectively. When the series transitioned into the FIA Formula 3 European Championship, Prema established near-total dominance, winning every team title from 2011 to 2018 and all but one of the drivers championships across that span.
Champions from this era who progressed to Formula One include Esteban Ocon, Lance Stroll, Mick Schumacher, and Andrea Kimi Antonelli. Juncadella also delivered the team its first Macau Grand Prix victory in 2011.
Prema entered the GP2 Series in 2016, finishing first and second at its debut with Red Bull junior Pierre Gasly and Antonio Giovinazzi. When the series became the FIA Formula 2 Championship in 2017, Ferrari Driver Academy member Charles Leclerc won seven races and claimed the title early. Mick Schumacher, son of seven-time world champion Michael Schumacher, won the 2020 F2 drivers championship with the team.
Alongside its European F3 and F2 programmes, Prema expanded to cover the entire FIA junior ladder. The team won the first two editions of the Italian Formula 4 Championship with Lance Stroll and Ralf Aron. In the inaugural 2019 FIA Formula 3 Championship, Prema secured a dominant one-two-three in the final drivers standings with Robert Shwartzman taking the title ahead of Marcus Armstrong and Jehan Daruvala. Oscar Piastri, who later competed in Formula One with McLaren, won the 2020 FIA Formula 3 championship for the team.
As of 2025, Prema fielded 29 drivers across fourteen championships under various names.
In 2025, Prema entered the IndyCar Series, becoming the first team from the European single-seater ladder to join the American open-wheel series in many years. The team competed with a two-driver lineup of Callum Ilott and Robert Shwartzman, supplied by Chevrolet. Shwartzman delivered a landmark result by taking pole position for the 2025 Indianapolis 500, becoming the first rookie to win the pole at Indianapolis since 1983. However, reports of financial uncertainty emerged in late 2025 and the departure of the Rosin family from the team in January 2026 placed the continuation of the IndyCar programme in doubt. In February 2026, Australian engineer Stephen Mitas was confirmed as the team's new principal and CEO.
Over four decades of competition, Prema Racing developed into one of the defining teams of European junior motorsport. Its consistent ability to attract top manufacturer junior programmes — including Ferrari, Red Bull, Mercedes, Renault, Toyota, and Williams — and to develop those drivers into Formula One competitors established it as a benchmark for junior team operations globally. The team's endurance racing ambitions added further reach from 2022 onward, with entries in the FIA World Endurance Championship and the European Le Mans Series marking a deliberate broadening beyond single-seater racing.