There are two main forms: stage rallies and road rallies. Since the 1960s, stage rallies have been the professional branch of the sport. They are based on straightforward speed over stretches of road closed to other traffic. These may vary from asphalt mountain passes to rough forest tracks, from ice and snow to desert sand, each chosen to provide an enjoyable challenge for the crew and a test of the car's performance and reliability.

The entertaining and unpredictable nature of the stages, and the fact that the vehicles are in some cases closely related to road cars, means that the bigger events draw massive spectator interest, especially in Europe, Asia and Oceania.

Road rallies are the original form, held on highways open to normal traffic, where the emphasis is not on outright speed but on accurate timekeeping and navigation and on vehicle reliability, often on difficult roads and over long distances. They are now primarily amateur events. There are several types of road rallies testing accuracy, navigation or problem solving. Some common types are: Regularity rally or a Time-Speed-Distance rally (also TSD rally, testing ability to stay on track and on time),[6] another is the Pan-Am or Monte-Carlo-style rally (testing navigation), and the Gimmick rally (testing logic).

Many early rallies were called trials, and a few still are, although this term is now mainly applied to the specialist form of motor sport of climbing as far as you can up steep and slippery hills. And many meets or assemblies of car enthusiasts and their vehicles are still called rallies, even if they involve merely the task of getting there (often on a trailer).

Rallying is a very popular sport at the "grass roots" of motorsport—that is, motor clubs. Individuals interested in becoming involved in rallying are encouraged to join their local automotive clubs. Club rallies (e.g. road rallies or regularity rallies) are usually run on public roads with an emphasis on navigation and teamwork. These skills are important fundamentals required for anyone who wishes to progress to higher-level events. (See Categories of rallies.)

As a result of the drivers not knowing exactly what lies ahead, the lower traction available on dirt roads, and the driving characteristics of small cars, the drivers are much less visibly smooth than circuit racers, regularly sending the car literally flying over bumps, and sliding the cars out of corners.

A typical rally course consists of a sequence of relatively short (up to about 50km/30mi), timed "special stages" where the actual competition takes place, and untimed "transport stages" where the rally cars must be driven under their own power to the next competitive stage within a generous time limit. Rally cars are thus unlike virtually any other top-line racing cars in that they retain the ability to run at normal driving speeds, and indeed are registered for street travel. Some events contain "super special stages" where two competing cars set off on two parallel tracks (often small enough to fit in a football stadium), giving the illusion they are circuit racing head to head. These stages, ridiculed by many purists, seem increasingly popular with event organizers. Run over a day, a weekend, or more, the winner of the event has the lowest combined special and super special stage times. Given the short distances of super special stages compared to the regular special stages and consequent near-identical times for the frontrunning cars, it is very rare for these spectator-oriented stages to decide rally results, though it is a well-known axiom that a team can't win the rally at the super special, but they can certainly lose it.