Paksas was born in Telšiai to Feliksas and Elena. In 1974, he finished Zemaites High School and continued studies at the Vilnius Civil Engineering Institute (now Vilnius Gediminas Technical University). Paksas received a degree in civil engineering in 1979. In 1984, he graduated Leningrad Civil Aviation Academy. During this period, he competed in aerobatics competitions, participating in both Soviet and Lithuanian teams and winning several championships.

A national aerobatics champion in the 1980s, after the collapse of the Soviet Union, Paksas founded a construction company, Restako. In 1997, he was elected to Vilnius City Council for the centre-right Homeland Union and became mayor. In May 1999, Paksas was appointed Prime Minister, but resigned five months later after a disagreement over privatisation. Paksas joined the Liberal Union of Lithuania (LLS) in 2000. The LLS won the 2000 election, and Paksas became PM again, but he left within seven months after another dispute over economic reforms.

From 1992 to 1997, Rolandas Paksas was the President of the construction company "Restako".

Paksas, a former member of Communist Party of Lithuania (LKP) and its successor leftist Democratic Labour Party (LDDP) in 1995 switched his political orientation in favour of conservative right Homeland Union (Lithuanian Conservatives). In 1997 Paksas was elected to Vilnius City Council and became the Mayor of the Vilnius city municipality. Paksas also served as chairman of the Vilnius branch of the Homeland Union (Lithuanian Conservatives).

In June 1999, he became Prime Minister, heading the ninth Government after independence. Five months later, he resigned because of a disagreement over the sale of Mažeikių Nafta, a major Lithuanian oil refining company, to a US oil company. He then served as Special Assignments envoy to Adamkus.

After leaving Homeland Union Paksas joined Liberal Union of Lithuania and in April 2000, he became the Mayor of the Vilnius city municipality again. In 2000, he was elected as the Prime Minister in the eleventh Cabinet and served from November 2000 to June 2001. In March 2002, Paksas was elected as a chairman of his newly founded Liberal Democratic Party.

In 2002, Paksas founded the Liberal Democratic Party, and ran for the presidency, winning the run-off against incumbent Valdas Adamkus in January 2003. It emerged that he had granted citizenship to a major campaign donor, leading to his impeachment and removal from office in April 2004. He was the first European head of state to have been impeached. Barred from the Seimas, Paksas was elected to the European Parliament in 2009, while leading his party, now called Order and Justice (TT). His lifetime ban from the parliament was ruled to be disproportionate measure by the European Court of Human Rights in 2011. In 2018 the amendment which would allow for Paksas to run for parliamentary seat is to be submitted.

On 26 February 2003 his term as a President began. During his term, concerns arose that he had ties to the Russian mafia. Yuri Borisov, President of the aviation company Avia Baltika, had donated $400,000 to his campaign, and was given Lithuanian citizenship by Paksas' decree. This decree was later ruled to be unconstitutional by Constitutional Court of Lithuania. Paksas' connections were investigated by the Department of Security. In early 2004, the Seimas started impeachment proceedings against him. On 31 March 2004 the Constitutional Court of Lithuania found him guilty of violating the constitution and his oath of office. On 6 April 2004, the Parliament (Seimas) voted on three charges: that he had leaked Classified information about his investigation to Borisov; that he had improperly restored Borisov's citizenship; and that he had interfered in a privatization transaction. The vote passed, effectively removing Paksas from the presidency.

The District Court of Vilnius found Paksas not guilty of disclosing Classified information (state secrets). This decision was reversed in 2005 by the Court of Appeals of the Republic of Lithuania, on the basis that the District Court had not linked all the supporting evidence. The Appeals Court, while finding Paksas guilty of a Criminal act, did not impose a penalty, stating that Paksas's departure from public Service meant that he no longer posed a threat.

In 2011, the European Court of Human Rights found the lifetime prohibition for Paksas to be elected to the parliament to be disproportionate and thus in violation of the European Convention on Human Rights.