In 1966, Penske bought a Lola T70 and hired Mark Donohue as his fulltime driver, inaugurating Penske Racing. Fielding Chevrolet Camaros and, later, AMC Javelins, in Trans-Am competition; Porsche 917-10 and 917-30 Turbopanzers in Canadian-American Challenge Cup competition; and the Lola in such races as the 24 Hours of Daytona, Penske Racing became a force to be reckoned with by securing championships in the USRRC series in 1967 and 1968, and SCCA Trans-Am championships in 1968, 1969, and 1971, 1972, and 1973.
In 1971, Penske Racing entered IndyCar racing. Donohue qualified for the pole at the Sears Point 150 in April that year, and scored the team's first victory at the Pocono 500 in July. The following year, Donohue won the Indianapolis 500, the first of twelve wins that Penske Racing would earn before 2003, with such drivers as Al Unser, Sr., Bobby Unser, Rick Mears, Danny Sullivan, Emerson Fittipaldi, Paul Tracy, Gil de Ferran, and Helio Castroneves. By 2001, the team had amassed a staggering eleven national championships in IndyCar racing.
Penske's efforts in the international Grand Prix Formula One series were less successful. Following a crash during practice session for the 1975 Austrian Grand Prix, Donohue died. Penske persevered, however, and posted a win in the 1976 Austrian Grand Prix with John Watson driving a PC4-Ford. This would be Penske Racing's only Formula One win, however, as he decided to quit the series at the end of the 1976 season. Penske Racing's win marked only the third time that a team from the United States won a Formula One event.
In the mid-1970s, Penske Racing also began fielding cars in the NASCAR circuit. Driver Bobby Allison drove an AMC Matador to two wins at Darlington Speedway in 1975. Penske Racing's streak of NASCAR successes extended into the twenty-first century with driver Rusty Wallace.