Born in Atlanta, Georgia, he studied electrical engineering at Union College, and then he served as a 2nd lieutenant in World War I. In the early 1920s he decided to work as an actor. He became a Broadway star by way of his starring role in the original 1924 production of George Kelly's play The Show-Off.
He arrived in Hollywood in 1929, and he started in many pictures as a newspaperman. He played reporter Hildy Johnson in the original 1928 stage production of The Front Page and a Walter Winchell-type gossip columnist in 1932's Blessed Event. Tracy starred as the columnist in Advice to the Lovelorn (1933), very loosely based on the novel Miss Lonelyhearts by Nathaniel West. He played The Buzzard, the criminal who leads Liliom (Charles Farrell) into a fatal robbery, in the 1930 film version of Liliom. He also played Lupe Velez's frenetic manager in Gregory LaCava's The Half-Naked Truth in 1932, and the following year portrayed John Barrymore's agent in the great comedy Dinner at Eight, directed by George Cukor. His flourishing film career was temporarily disrupted in 1934 while on location in Mexico filming Viva Villa!, featuring Wallace Beery as Pancho Villa, when he stood on his balcony and urinated on a military parade that was passing below in Mexico City. He was fired from the film and replaced by Stuart Erwin.
During World War II he returned to uniform. Tracy did continue on in films and also had two television series in the 1950s, New York Confidential, and was one the actors who portrayed the TV detective Martin Kane. He also was cast as the President in both the stage and film versions of The Best Man (1964), written by Gore Vidal. The movie version featured Henry Fonda and remains practically the only film of the period in which both the protagonists are atheists. Remarkably, Vidal's script was filmed with no studio interference. Tracy received his only Academy Award nomination, as Best Supporting Actor for The Best Man.