Richmond grew up in Ashland, Ohio, in a wealthy family whose fortune derived from his father Al's invention of a machine for boring underneath highways, commercialized through Richmond Manufacturing. Tim received a go-kart as a toddler and later raced at local tracks around Ohio. His parents enrolled him in Miami Military Academy in Florida, where he excelled in athletics and was named Athlete of the Year in 1970. He earned his private pilot's license at 16. Richmond briefly attended Ashland University before dropping out to pursue racing.
Richmond's formal racing career began in sprint cars after a friend's co-owned car gave him his first practice laps at Lakeville Speedway in 1976. He returned to sprint cars in 1978 on the USAC national tour, where he was also named Rookie of the Year. His talent on road courses emerged quickly: at a 1978 Mini Indy event at Phoenix, he won the Formula Super Vee support race and attracted the attention of Roger Penske.
For the 1980 Indianapolis 500, Richmond set the fastest unofficial practice speed of the month before a qualifying crash. He started nineteenth, worked his way into the top ten during the race, and finished ninth after running out of fuel at the end. He was named the 1980 Indianapolis 500 Rookie of the Year, the springboard that brought him to NASCAR two months later.
Richmond debuted at the Coca-Cola 500 at Pocono in July 1980. Over the following seasons he developed steadily, earning his first win at Riverside International Raceway in 1982 — a road course victory — followed by a second at the same track before the season ended. He won at Pocono in 1983, at North Wilkesboro in 1984, and compiled consistent top-ten results through 1984 and 1985 while driving for Raymond Beadle.
The defining chapter of Richmond's career began in 1986 when he joined Hendrick Motorsports, pairing with veteran crew chief Harry Hyde in the No. 25 Folgers Coffee machine. After a slow start, the partnership clicked mid-season. Richmond won seven races in 1986 — more than any other driver on tour — including two at Pocono and victories at Charlotte, Riverside, and several other venues. He accumulated 13 top-five and 16 top-ten finishes, earning a third-place championship finish and the National Motorsports Press Association Co-Driver of the Year award alongside Dale Earnhardt.
In 1987, already ill and having missed the Daytona 500 with a condition publicly described as double pneumonia, Richmond returned for the Miller High Life 500 at Pocono. He led 82 of the final laps and won by eight car-lengths over Bill Elliott despite having gearbox problems that limited him to only fourth gear during pit stops. He won again at Riverside the following week. His final start came at Michigan International Speedway in August 1987, and he resigned from Hendrick Motorsports in September.
Richmond had fallen ill following the 1986 NASCAR awards banquet. The true cause — AIDS — was not publicly disclosed at the time. He attempted a comeback in 1988 but was suspended by NASCAR after a drug test flagged ibuprofen and pseudoephedrine, both over-the-counter medications. Richmond sued NASCAR over the suspension; the suit was settled out of court. NASCAR later acknowledged its test was flawed. Richmond refused to release his full medical records to the sanctioning body, effectively ending any possibility of returning to competition.
He withdrew to his family's condominium in Florida and died on August 13, 1989, at age 34. Ten days after his death, his family confirmed he had died from complications of AIDS. Richmond was buried in Ashland, Ohio.
NASCAR named Richmond one of its 50 Greatest Drivers in 1998. He was inducted into the International Motorsports Hall of Fame in 2002. The character Cole Trickle in the 1990 film Days of Thunder, played by Tom Cruise, was loosely based on Richmond and his relationship with crew chief Harry Hyde and car owner Rick Hendrick. Charlotte Motor Speedway president Humpy Wheeler described Richmond as "almost a James Dean-like character" — a reflection of the outsized personality and talent that made him one of the most memorable figures of his era. ESPN's 30 for 30 documentary series profiled Richmond in the 2010 film Tim Richmond: To The Limit.