After studying for a year in Paris at the Sorbonne, Rice joined EMI Records as a management trainee in 1966. When EMI Producer Norrie Paramor left to set up his own organization in 1968, Rice joined him as an assistant Producer, working with, among others, Cliff Richard.

Rice married Jane McIntosh on 19 August 1974, the couple having met while working at Capital Radio. The marriage dissolved in the late 1980s after the British tabloid newspapers revealed that he had been conducting an affair with the singer Elaine Paige. Jane retains the title Lady Rice as, despite obtaining a divorce decree nisi, the couple never made it absolute and therefore they remain technically married.

Along with his brother Jo and the radio presenters Mike Read and Paul Gambaccini, he was a co-founder of the Guinness Book of British Hit Singles and served as an Editor from 1977 to 1996. In September 1981, Rice, along with Colin Webb and Michael Parkinson, launched Pavilion Books, a publishing house with a publishing focus on music and the arts. He held it until 1997.

Describing his religion, Rice stated in a 1982 interview, "Technically I'm Church of England, which is really nothing. But I don't follow it. I wouldn't say I was a Christian. I have nothing against it." Conversely, he also stated that he adapted the biblical stories of Joseph and Jesus to musicals because "I'd always rather take a true story over an untrue one."

Rice was made a Knight Bachelor by Queen Elizabeth II in 1994 (entitling him to the address "Sir Tim Rice" or "Sir Tim"), was inducted into the Songwriters Hall of Fame in 1999, and was named a Disney Legend in 2002.

In 1996, his collaboration with Lloyd Webber for the film version Evita won Rice his third Academy Award for Best Original Song with the song "You Must Love Me". Rice has also collaborated with Björn Ulvaeus and Benny Andersson of ABBA on Chess and with Rick Wakeman on the albums 1984 and Cost of Living. He is writing eight lyrics to Pyotr Ilyich Tchaikovsky's ballet, The Nutcracker. The working title is The Nutcracker: The Untold Story.

Lady Rice manages the family's 33,000 acre Dundonnell estate which Sir Tim Rice bought in 1998 for £2 million. She has won awards for her conservation work with red squirrels. They have two children, Eva Jane Florence, a Novelist and singer-songwriter, and Donald Alexander Hugh, a film Director and theatre Producer who also helps to run Dundonnell. Eva, who was named after Eva Perón, is the author of the novel The Lost Art of Keeping Secrets, which was a finalist for the British Book Award Best Read of the Year.

He has also been a frequent guest panellist for many years on the radio panel games Just a Minute and Trivia Test Match. Rice often jokes that he is most recognised in America for his appearance in the film About a Boy. The film includes several clips from an edition of the game show Countdown on which he was the guest adjudicator. His other interests include cricket (he was President of the MCC in 2002) and maths. He wrote the foreword to the book Why Do Buses Come In Threes by Rob Eastaway and Jeremy Wyndham, and featured prominently in Tony Hawks's One Hit Wonderland, where he co-wrote the song which gave Hawks a top twenty hit in Albania.

Rice supports Sunderland association football club. He was awarded an honorary doctorate of letters by the University of Sunderland at a ceremony at the Stadium of Light in November 2006.

He was also a supporter of the Conservative Party, but in 2007 stated that the Conservatives were no longer interested in him and that his relationship with the Party had "irrevocably changed." He was reported in early 2014 to be a donor for the UK Independence Party However, he has since stated in an interview for Chat Life that the article was referring to a one off payment that he made at a dinner event held by the party around two years earlier advocating opposition to wind turbine construction, and that he was not a member or regular donor to any political party.

In 2008, Rice received a star on the Hollywood Walk of Fame.

On 2 December 2010 he addressed the eighth Bradman Oration in Adelaide.

He also took part in the Bush Theatre's 2011 project Sixty Six Books for which he wrote a piece based upon a book of the King James Bible

Despite his disenchantment with the Conservative Party, Rice joined Andrew Lloyd Webber, both supporters of Margaret Thatcher, at her funeral in 2013.

In 2015, Rice expressed his indebtedness to the Journalist Angus McGill as "the man responsible for Andrew Lloyd Webber and I having our first song recorded". Speaking at McGill's funeral, Rice told a tale from his days at EMI about trying to rig the results of the London Evening Standard Girl of the Year competition in 1967. As "glorified office boy", Rice was writing songs with Lloyd Webber and desperate to find anybody to record one of their songs. Rice and colleagues filled in 5,000 entry forms overnight voting for the contestant who was a singer, and delivered them to McGill, who supervised the competition. Rice said it was "a disgraceful act of dishonesty on my part... without actually breaking the rules". As a result, the Standard proclaimed two Girls of the Year and Rice’s choice was signed to EMI where she made her first record. Rice said at the funeral: "I owe [Angus] an awful lot, which is just one of the reasons why I'm here today."

Sir Tim Rice has a second daughter, Zoe Joan Eleanor from a relationship with Nell Sully, an Artist, Rice has a third daughter, Charlotte Cordelia Violet Christina from a relationship with Laura-Jane Foley, a Writer. As of 2017, he also has seven grandchildren. In his seventies his rumoured girlfriends have included the cricketer Isabelle Duncan, the PR girl Gina Rozner and socialite Amanda Eliasch all whilst remaining technically married.

According to The Sunday Times Rich List of the UK’s richest millionaires, Rice is worth £152 million as of 2017.