Carlisle played two years of college basketball at the University of Maine before transferring to the University of Virginia, where he co-captained the Cavaliers to the Final Four in 1984. After graduating that same year, he was drafted by the Boston Celtics, where he played alongside Larry Bird in the Celtics' 1986 NBA Championship team. He posted less-than-impressive numbers with the Celtics, averaging 2.2 points, 1.0 assists and 0.8 rebounds per game while playing almost exclusively as a substitute.

In 1987, Carlisle was sent to the New York Knicks and then played briefly with the New Jersey Nets in 1988 before being offered an assistant coach position with the Nets, where he spent five seasons under Bill Fitch and Chuck Daly. In 1994, Carlisle joined the assistant coaching staff with the Portland Trail Blazers under coach P.J. Carlesimo, where he spent three seasons.

In 1997, Rick Carlisle joined the Indiana Pacers organization as an assistant coach under his former teammate, Larry Bird. During his time as the Pacers' offensive coordinator, he helped the Pacers to two of their best seasons ever. First, in 1997-98, the Pacers stretched the Chicago Bulls to the limit, narrowly losing the deciding seventh game of the Eastern Conference finals to the eventual champions. Then, in 1999-2000, the Pacers made the NBA Finals for the first time, losing to the Los Angeles Lakers. Bird stepped down as coach, and pushed for Carlisle to be selected as his replacement, but the job went to Isiah Thomas.

For the 2001 season, Carlisle was recruited by the Detroit Pistons to be their new head coach. In two seasons as Pistons' head coach, Carlisle led them to consecutive 50-32 records (.610) and playoff appearances, and was thus named Coach of the Year in 2002. However, the Pistons fired Carlisle after the 2002-03 season with a year remaining on his contract and hired Larry Brown. Friction between Carlisle and team ownership was cited as one of the primary reasons for the seemingly inexplicable firing.

For the 2003-04 season, Carlisle was once again hired by the Indiana Pacers to fill the head coaching vacancy left by Thomas, who was fired by Larry Bird in one of his first acts as the Pacers' new President of Basketball Operations. In his first season, Carlisle led the Pacers to the league's best regular-season record (61-21, .744) and playoff victories over the Boston Celtics and Miami Heat before losing to the Detroit Pistons in the Eastern Conference Finals. In 2005, The Pacers roster was decimated by injuries (Jermaine O'Neal, Jamaal Tinsley) and suspension due to the November 19 brawl incited by Ron Artest at the Palace of Auburn Hills (Artest, Stephen Jackson, O'Neal, Reggie Miller, Anthony Johnson, and David Harrison). Carlisle was able to rally the Pacers into the NBA Playoffs. As a sixth seed, they again defeated the Boston Celtics in the first round, before being defeated once again by the eventual conference champion Pistons.