Rao's mother tongue was Telugu, and he had an excellent command of Marathi. In addition to eight other Indian languages (Hindi, Oriya, Bengali, Gujarati, Kannada, Sanskrit, Tamil and Urdu), he spoke English, French, Arabic, Spanish, German and Persian. Along with his distant cousin Pamulaparthi Sadasiva Rao, Ch. Raja Narendra and Devulapalli Damodar Rao, PV edited a Telugu weekly magazine called Kakatiya Patrika in the 1940s. Both PV and Sadasiva Rao contributed articles under the pen-name Jaya-Vijaya.

Narasimha Rao was an active freedom fighter during the Indian Independence movement and joined full-time politics after independence as a member of the Indian National Congress. His tenure as Chief minister of Andhra Pradesh is well remembered even today for his land reforms and strict implementation of land ceiling acts in Telangana region. President's rule had to be imposed to counter the Jai Andhra movement during his tenure. He rose to national prominence in 1972 for handling several diverse portfolios, most significantly Home, Defence and Foreign Affairs, in the cabinets of both Indira Gandhi and Rajiv Gandhi. In fact, it is speculated that he was in the running for the post of India's President along with Zail Singh in 1982.

In the late 1980s, the Bharatiya Janata Party (BJP) brought the Ram Janmabhoomi issue to the centrestage of national politics, and the BJP and VHP began organising larger protests in Ayodhya and around the country

Rao, along with fellow minister K.K. Tewary, Chandraswami and K.N. Aggarwal, were accused of forging documents showing that Ajeya Singh had opened a bank account in the First Trust Corporation Bank in St. Kitts and deposited $21 million in it, making his father V. P. Singh its beneficiary. The alleged intent was to tarnish V.P. Singh's image. This supposedly happened in 1989. However, only after Rao's term as PM had expired in 1996, was he formally charged by the Central Bureau of Investigation (CBI) for the crime. Less than a year later the court acquitted him due to lack of evidence linking him with the case.

Rao decided that India, which in 1991 was on the brink of bankruptcy, would benefit from liberalising its economy. He appointed an Economist, Dr. Manmohan Singh, a former governor of the Reserve Bank of India, as Finance Minister to accomplish his goals. This liberalisation was criticised by many socialist nationalists at that time.

Members of the Vishva Hindu Parishad (VHP) demolished the Babri Mosque (which was constructed by India's first Mughal Emperor, Babar) in Ayodhya on 6 December 1992. The site is the supposed birthplace of the Hindu deity Rama . The destruction of the disputed structure, which was widely reported in the international media, unleashed large scale communal violence, the most extensive since the Partition of India. Hindus and Muslims were indulged in massive rioting across the country, and almost every major city including Delhi, Mumbai, Kolkata, Ahmedabad, Hyderabad, Bhopal struggled to control the unrest.

Rao's government was facing a no-confidence motion in July 1993, because the opposition felt that it did not have sufficient numbers to prove a majority. It was alleged that Rao, through a representative, offered millions of rupees to members of the Jharkhand Mukti Morcha (JMM), and possibly a breakaway faction of the Janata Dal, to vote for him during the confidence motion. Shailendra Mahato, one of those members who had accepted the bribe, turned approver. In 1996, after Rao's term in office had expired, investigations began in earnest in the case. In 2000, after years of legal proceedings, a special court convicted Rao and his colleague, Buta Singh (who is alleged to have escorted the MPs to the Prime Minister). Rao was sentenced to three years in prison for corruption. "I sentence the accused PV Narasimha Rao and Buta Singh to rigorous imprisonment up to three years and a fine of 100,000 rupees ($2,150)," the judge said in his order. Rao appealed to the Delhi High Court and remained free on bail. In 2002, the Delhi High Court overturned the lower court's decision mainly due to the doubt in credibility of Mahato's statements (which were extremely inconsistent) and both Rao and Buta Singh were cleared of the charges.

Narasimha Rao was charged for facilitating his safe exit of accused of 1995 Purulia arms drop case. Although it was never proved.

In spite of significant achievements in a difficult situation, in the 1996 general elections the Indian electorate voted out Rao's Congress Party. Soon, Sonia Gandhi's coterie forced Mr. Rao to step down as Party President. He was replaced by Sitaram Kesri.

Rao energised the national nuclear security and ballistic missiles program, which ultimately resulted in the 1998 Pokhran nuclear tests. It is speculated that the tests were actually planned in 1995, during Rao's term in office, and that they were dropped under American pressure when the US intelligence got the whiff of it. Another view was that he purposefully leaked the information to gain time to develop and test thermonuclear device which was not yet ready. He increased military spending, and set the Indian Army on course to fight the emerging threat of terrorism and insurgencies, as well as Pakistan and China's nuclear potentials. It was during his term that terrorism in the Indian state of Punjab was finally defeated. Also scenarios of aircraft hijackings, which occurred during Rao's time ended without the government conceding the terrorists' demands. He also directed negotiations to secure the release of Doraiswamy, an Indian Oil executive, from Kashmiri terrorists who kidnapped him, and Liviu Radu, a Romanian diplomat posted in New Delhi in October 1991, who was kidnapped by Sikh terrorists. Rao also handled the Indian response to the occupation of the Hazratbal holy shrine in Jammu and Kashmir by terrorists in October 1993. He brought the occupation to an end without damage to the shrine. Similarly, he dealt with the kidnapping of some foreign tourists by a terrorist group called Al Faran in Kashmir in 1995 effectively. Although he could not secure the release of the hostages, his policies ensured that the terrorists demands were not conceded to, and that the action of the terrorists was condemned internationally, including Pakistan.

Lakhubhai Pathak, an Indian businessman living in England, alleged that Chandraswami and K.N. Aggarwal alias Mamaji, along with Rao, cheated him out of $100,000. The amount was given for an express promise for allowing supplies of paper pulp in India, and Pathak alleged that he spent an additional $30,000 entertaining Chandraswami and his secretary. Narasimha Rao and Chandraswami were acquitted of the charges in 2003 and before his death, Rao was acquitted of all the cases charged against him,

Rao suffered a heart attack on 9 December 2004, and was taken to the All India Institute of Medical Sciences where he died 14 days later at the age of 83. His family wanted the body cremated in Delhi."This is his karmabhoomi", Rao's son Prabhakara told Manmohan Singh. But it is alleged that Sonia Gandhi's closest aides ensured that the body was moved to Hyderabad. In Delhi, his body was not allowed inside AICC building. His body was kept in state at the Jubilee Hall in Hyderabad. His funeral was attended by the then Prime Minister Manmohan Singh, the then Home Affairs Minister Shivraj Patil, the then Bharatiya Janata Party (BJP) President L.K. Advani, the then Defence Minister Pranab Mukherjee, the then Finance Minister P. Chidambaram and many other dignitaries. Rao was a long-time widower, since his wife died in 1970 and he was survived by his eight children. The Government of Telangana declared his birthday to be celebrated as a Telangana State function in 2014.