Rakhee shot to fame in the 1971 film Sharmilee where she played a double role opposite Shashi Kapoor. Ever since, she has starred in many blockbusters such as Kabhi Kabhie, Muqaddar Ka Sikander and Laawaris.
In the 1980s Rakhee began playing the role of mother to leading stars of the time. She retired from the industry in 2003 after acting in a Bengali film, Shubho Muhurat, which won her a National Award.
Her first marriage to Bengali film director Ajay Biswas was a failure. Later she married director, poet and lyricist Gulzar and they have a daughter, Meghna Gulzar, who is a film director. She has separated from Gulzar.