Rosenthal was born on November 9, 1926 in Paris, France, into an assimilated Russian Jewish family. Her father, Léonard Rosenthal, was a well-known merchant of Oriental pearls and precious stones. Her mother was Mara Jacoubovitch Rosenthal. During World War II, her family escaped France, moving to Rio de Janeiro, Brazil, via a short stay in Portugal. This périple inspired the creation of her piece, My Brazil. In April 1941, her family left Brazil to settle in New York, where Rachel Rosenthal would later graduate from the High School of Music and Art and become a U.S. citizen. At the end of the war, Rosenthal undertook theater, art, and dance studies with Hans Hoffmann, Merce Cunningham, Erwin Piscator and Jean-Louis Barrault.

In 1955, she moved to California, where she created the experimental Instant Theatre, performing in and directing it for ten years. The Cast Theatre, now named El Centro Theatre was were Instant Theatre was created. She was a leading figure in the L.A. Women's Art Movement in the 1970s and co-founded Womanspace. Rosenthal began teaching classes in performance in 1979.

Rosenthal formed The Rachel Rosenthal Company in 1989 in Los Angeles, California. The company's repertoire deals with themes such as environmental destruction, social justice issues, animal rights, earth-based spirituality, in a hybrid form that combines voice, text, movement, music, video projection, and elaborate theatrical costuming, set design, and dramatic lighting, ultimately challenging the rigid boundaries that have traditionally separated performance art from theater.

In 1990, Rosenthal premiered Pangaean Dreams at The Santa Monica Museum Of Art for The L.A. Festival. In 1992 FUTURFAX was commissioned by the Whitney Museum in New York. In 1994 she premiered her 56-performer piece Zone at the UCLA Center for the Performing Arts Wadsworth Theatre. Between 1994 - 97, with her newly formed Company, she revived her acclaimed Instant Theatre of the 50’s & 60’s as TOHUBOHU! and went on to collaboratively create An Evening (1994), TOHUBOHU! (1995—97), Meditation on the Life and Death of Ken Saro-Wiwa and Timepiece (1996), The Swans and The Unexpurgated Virgin (1997) . Both Timepiece and The Unexpurgated Virgin premiered at the Fall Ahead Festival at Cal State LA. In 2000, Toronto-based performance art producer FADO [1], in collaboration with 7a*11d (International Performance Art Festival), presented Rosenthal's final full-length performance piece, UR-BOOR, for two nights only. At the age of 73, Rosenthal said she was retiring from performance to dedicate herself to her animal rights activism and pursue a career as a painter.[2]

Rosenthal has lectured at Carnegie-Mellon University's Robert Lepper Distinguished Lecture in Creative Inquiry series, as a lecturer/presenter at the first Performance, Culture and Pedagogy Conference at Penn. State (1996). Rosenthal has also been a visiting artist at The Art Institute of Chicago, New York University, University of California Los Angeles, UC Irvine, UC Santa Barbara, California Institute of the Arts, and at the Naropa, Esalen and Omega Institutes.

Artist Robert Rauschenberg has honored her in a new suite of prints entitled Tribute 21. Recipients include Mikhail Gorbachev, R. Buckminster Fuller, Toni Morrison, Nelson Mandela and the Dalai Lama.

Rosenthal had a small part in an episode of Frasier, specifically The Crucible in Season 1. As eccentric Seattle-based artist Martha Paxton, she attends a cocktail do in Frasier's residence as guest-of-honour, being the supposed artist of a painting Frasier is very proud of, only for her to tell him in front of all present the painting wasn't her work.