Aaltonen's route to motorsport ran through his father, August Aaltonen, who raced motorcycles before World War II, raced cars after it, introduced speedway racing to Finland, and ran a family auto repair shop near Turku. Rauno's competitive upbringing began not on four wheels but on water: he won the Finnish National Speedboat Championship seven times starting at age twelve. He then competed in motorcycles — road racing, speedway, circuit racing, and motocross — becoming the first Finnish driver to win a Grand Prix motorcycle event.
He entered his first car rally in 1956 at the age of eighteen in a Mercedes 170S, and by the late 1950s was developing the left-foot braking technique — using the left foot for braking and the clutch while keeping the right foot on the accelerator — during competition on Finland's snow and gravel roads. He acquired a Saab 93B for regional competition in 1957 and made his debut in the Jyväskylän Suurajot (later Rally Finland) in 1958. His 1961 season brought his first Finnish Rally Championship title and a victory in the 1000 Lakes Rally driving a Mercedes-Benz 220 SE.
In 1963 Aaltonen joined the BMC works team and adopted the Mini Cooper S, with Tony Ambrose as his regular co-driver. He won the Alpine Rally Coupe des Alpes in both 1963 and 1964, and in 1964 claimed the Liège-Sofia-Liège endurance rally — also known as the Spa-Sofia-Liège — in an Austin-Healey 3000. His 1965 season was the most dominant of his career: he took outright wins at Geneva, the Czech Rally Vltava, the Polish Rally, the Munich-Vienna-Budapest Rally, and the RAC Rally in Britain, accumulating enough results to win the European Rally Championship title and his second Finnish Rally Championship, both alongside Tony Ambrose.
Aaltonen was part of the BMC "Three Musketeers" alongside Paddy Hopkirk and Timo Mäkinen. Hopkirk had won the 1964 Monte Carlo Rally outright from Oslo in a Mini Cooper S. Mäkinen retained the title for Mini in 1965 in treacherous conditions, winning five of the six final special stages. In 1966 Aaltonen, Mäkinen, and Hopkirk finished first, second, and third overall on the Monte Carlo Rally — only to be disqualified after the race for an alleged lighting infringement. Pauli Toivonen was awarded the win.
In 1967 Aaltonen returned to Monte Carlo with Henry Liddon — Hopkirk's co-driver from the 1964 win — as his co-driver. The pairing clicked immediately. Aaltonen guided the Mini Cooper S to an undisputed victory with twelve seconds to spare, completing what the Three Musketeers had been denied the previous year. He finished third again in Monaco in 1968 with Liddon.
In 1966, outside of rallying, Aaltonen demonstrated his versatility on the other side of the world. Paired with local driver Bob Holden in a works Morris Cooper S for British Motor Corporation Australia, he won the Gallaher 500 at Mount Panorama, New South Wales. They led from lap 2 and finished one lap ahead of the second-placed car, making it the only outright Bathurst win for a Mini and for a four-cylinder car in the series production era, over larger V8 Valiants and Falcons.
He made one appearance at the 24 Hours of Le Mans, in 1965, co-driving an Austin-Healey Sebring Sprite with Clive Baker for the Donald Healey Motor Company. The entry retired after 256 laps due to gearbox failure. He was listed for the 1966 Le Mans entry with Baker but the car did not start due to clutch and water pump problems in practice.
When the World Rally Championship launched in 1973, Aaltonen competed across the series until 1987, driving for manufacturers including Ford, Fiat, Opel, and Datsun. He took six WRC podium finishes, all second places, without a WRC outright win. His best WRC result came at the 1973 Acropolis Rally, where he finished second in a Fiat 124 Abarth Spider. The East African Safari Rally was a recurring contest: Aaltonen finished second on six separate occasions, including in 1977 driving a Datsun 160J with Lofty Drews, narrowly missing a win to Shekhar Mehta. He returned to the Safari podium again in 1979, 1980, and 1981.
Aaltonen pioneered left-foot braking in rally competition, a technique he refined from 1958 onward that became standard practice across front-wheel-drive, rear-wheel-drive, and all-wheel-drive cars in rallying. His methodical, analytical approach earned him the nickname "The Rally Professor" and influenced subsequent generations of Scandinavian rally drivers. A specific car control manoeuvre — rotating the car 360 degrees while maintaining trajectory — bears his name.
Following his retirement from competitive driving around 1990, he served as chief instructor for BMW driver training programmes in Austria and Germany before establishing a family-run rally school in Tahko, Finland, specialising in snow and ice driving, run alongside his children Tino and Kati Aaltonen. He competed in the Rallye Monte-Carlo Historique in 2017 in a classic Mini Cooper S with BMW Classic support, and again at age 82 in 2020. He participated in the Déjà vu North West event in 2024 at the age of 86.
In 2010 he was among the inaugural class of the Rally Hall of Fame, recognition that cemented his status as one of the defining figures of the pre-WRC era of international rallying.