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Subaru Rally Team Japan led by Noriyuki Koseki ran Subaru Leone coupé, sedan DL, RX (SRX) and RX Turbo in the World Rally Championship between 1980 and 1989 a few rallies per season. Drivers for individual rallies included Ari Vatanen, Per Eklund, Shekhar Mehta, Mike Kirkland, Possum Bourne and Harald Demut.

Mike Kirkland finished 6th overall and won the A Group at the 1986 Safari Rally. That year Subaru was one of the only manufactures combining 4WD and turbo. Subaru changed the rally model to Legacy RS for the 1990-1992 period and took part in the first complete season in the World Rally Championship with the same model in 1993.

Modified versions of the Impreza WRX and WRX STi have been competing successfully in rallying; drivers Colin McRae (1995), Richard Burns (2001) and Petter Solberg (2003) have won World Rally Championship drivers' titles with the Subaru World Rally Team, and Subaru took the manufacturers' title three years in a row from 1995 to 1997. Subaru's World Rally Championship cars are prepared and run by Prodrive, the highly successful British motorsport team. Several endurance records were set in the early and mid-nineties by the Subaru Legacy.

Subaru was briefly involved in Formula One circuit racing when it bought a controlling interest in the tiny Italian Coloni team for the 1990 season. The Coloni 3B's 12-cylinder engine was badged as a Subaru and shared the boxer layout with the company's own engines, but was an existing design built by Italian firm Motori Moderni.

The cars were overweight and underpowered and the partnership broke down before the season finished.[14] With the rise of rally racing, and the Import scene in the US, the introduction of the highly anticipated Subaru Impreza WRX in 2001 was successful in bringing high performance, AWD compact cars into the sports car mainstream.

On the 16 December 2008, it was announced that Subaru would no longer be competing in the World Rally Championships,[15] due to the issues with the current global economic crisis, combined with the prospect of a car which still needed development for the 2009 season and a change in regulations for the 2010 season.