Kim Rae-won debuted in the 1997 MBC teen drama Me. Two years later, he bagged the Best Young Actor trophy at the KBS Drama Awards for the series School 2. In 2000, he starred in the coming-of-age film Plum Blossom, in which he was named Best New Actor at the 21st Blue Dragon Film Awards. In 2003, he headlined the hit MBC romantic comedy Attic Cat, which recorded a peak viewership rating of 37.3 percent. He picked up a Top Excellence Award as well as the Popularity Award at the MBC Drama Awards for his work in the series. In 2004, he headlined the box-office hit romantic comedy My Little Bride, opposite Moon Geun-young. His performance in the movie earned him the Best New Actor trophy at the 41st Grand Bell Awards and the Most Popular Actor for Film citation at the 41st Baeksang Arts Awards. In 2011, he led the SBS romantic melodrama Thousand Day Promise, which won him a Top Excellence Award at the SBS Drama Awards. In 2015, he collected acting award nominations for his work in the SBS political drama Punch, including one from the 51st Baeksang Arts Awards. In 2016, he was paired with Park Shin-hye in the SBS medical drama Doctors, in which he received a Top Excellence Award at the SBS Drama Awards.

Kim Rae-won originally wanted to become a professional basketball player. However, an ankle tendon injury ended that childhood dream, leading him to pursue acting instead. He enlisted for his mandatory military service in August 2009.