Scorsese was partially convinced by De Niro to develop the project, though he eventually came to relate to La Motta's story. Schrader re-wrote Martin's first screenplay, and Scorsese and De Niro together made uncredited contributions thereafter. Pesci was an unknown actor prior to the film, as was Moriarty, who was suggested for her role by Pesci. During principal photography, each of the boxing scenes were choreographed for a specific visual style and De Niro gained approximately 70 pounds (32 kg) to portray La Motta in his early post-boxing years. Scorsese was exacting in the process of editing and mixing the film, expecting it to be his last major feature.

After receiving mixed initial reviews (and criticism due to its violent content), it went on to garner a high critical reputation and is now widely regarded among the greatest films ever made. It was listed in the National Film Registry in 1990, its first year of eligibility.

In 1964, an aging, overweight Jake LaMotta (Robert De Niro) practices a comedy routine. A flashback to 1941 shows his first loss in a major boxing match, against Jimmy Reeves. Jake's brother Joey LaMotta (Joe Pesci) later discusses a potential shot for the middleweight title with one of his Mafia connections, Salvy Batts (Frank Vincent). Some time thereafter, Jake spots a 15-year-old girl named Vickie (Cathy Moriarty) at an open-air swimming pool in his Bronx neighborhood. He eventually pursues a relationship with her, even though he is already married. Jake defeats Sugar Ray Robinson once in 1943 but loses to him three weeks later when the judges rule in favor of Robinson because he was leaving the sport temporarily for conscription in the U.S. Army. Jake is married to Vickie and Joey is also married by 1947. As Jake's fears grow about Vickie having feelings for other men, particularly Tony Janiro, the opponent for his forthcoming fight, he shows off his sexual jealousy when he beats Janiro in front of the local Mob boss, Tommy Como (Nicholas Colasanto) and Vickie. As Joey discusses the victory with journalists at the Copacabana, he is distracted by seeing Vickie approach a table with Salvy and his crew. Joey speaks with Vickie, who says she is giving up on his brother. Blaming Salvy, Joey viciously attacks him in a fight that spills outside of the club. Como later orders them to apologize, and has Joey tell Jake that if he wants a chance at the championship title, which he has control over, he will have to take a dive first. In a match against Billy Fox, Jake does not even bother to put up a fight. He is suspended shortly thereafter from the board on suspicion of throwing the fight, though he realizes the error of his judgment when it is too late. Despite the suspension, he eventually wins the middleweight championship title against Marcel Cerdan in 1949.

A year later, Jake asks Joey if he fought with Salvy at the Copacabana because of Vickie. Jake then asks if Joey had an affair with her; Joey refuses to answer, insults Jake, and decides to leave. Jake directly asks Vickie about the affair and she sarcastically states that she had sex with the entire neighborhood (including his brother, Salvy, and Tommy Como) after he breaks down the bathroom door where she briefly hides from him. Jake angrily walks to Joey's house and brutally assaults him in front of Vickie and Joey's wife and children. After defending his championship belt against Laurent Dauthuille, he makes a call to his brother after the fight, but when Joey assumes Salvy is on the other end and starts insulting and cursing at him, Jake says nothing and hangs up. This drags Jake down to when he eventually loses to Sugar Ray Robinson on their final encounter in 1951, letting Robinson land several hard blows on him as punishment for what he did.

By 1956, Jake and his family have moved to Miami. After staying out all night at his new nightclub there, Vickie tells him she wants a divorce (which she has been planning since his retirement). He is later arrested for introducing under-age girls (posing as 21-year-olds) to men and serves a jail sentence in 1957 after failing to raise enough bribe money by taking the jewels out of his championship belt instead of selling the belt itself. In his jail cell, Jake pounds the walls, sorrowfully questioning his misfortune and crying in despair. Upon returning to New York City in 1958, he happens upon his estranged brother Joey, who forgives him but is elusive. Going back to the beginning sequence, Jake refers to the "I coulda' have been a contender" scene from the 1954 movie On the Waterfront starring Marlon Brando complaining that his brother should have been there for him but is also keen enough to give himself some slack. After a stage hand informs him that the auditorium where he is about to perform is crowded, Jake starts to chant "I'm the boss" while shadowboxing. The film ends on an ambiguous note with the Biblical quote,

Raging Bull came about when De Niro read the autobiography upon which the film is based on the set of 1900. Although disappointed by the book's writing style, he became fascinated by the character of Jake LaMotta when he showed the book to Martin Scorsese on the set of Alice Doesn't Live Here Anymore as a means to hopefully consider the project. Scorsese repeatedly turned down his offers by resisting the director's chair, claiming he had no idea what Raging Bull was about, even though he did read some chapters of the text. The book was then passed onto Mardick Martin, the film's eventual co-screenwriter, who said "the trouble is the damn thing has been done a hundred times before — a fighter who has trouble with his brother and his wife and the mob is after him". The book was even shown to producer Irwin Winkler by De Niro, who was willing to assist only if Scorsese agreed. After nearly dying from a drug overdose, Scorsese agreed to make the film for De Niro's sake, not only to save his own life but also to save what remained of his career. Scorsese knew that he could relate to the story of Jake LaMotta as a way to redeem himself when he saw the role being portrayed as an everyman that "...the ring becomes an allegory of life" making the project a very personal one to him.

Preparation for the film began with Scorsese shooting some 8mm color footage featuring De Niro boxing in a ring. One night when the footage was being shown to De Niro, Michael Chapman, and his friend and mentor, the English director Michael Powell, Powell pointed out that color of the gloves at the time would have only been maroon, oxblood, or even black. Scorsese decided to use this as one of the reasons to film Raging Bull in black and white. Other reasons would be to distinguish the film from other color films around the time and to acknowledge the problem of fading color film stock - an issue Scorsese recognized. Scorsese even went to two matches at the Madison Square Garden to aid his research, picking up on minor but essential details such as the blood sponge and latterly, the blood on the ropes (which would later be used in the film).

Under the guidance of Winkler, Mardik Martin was asked to start writing the screenplay. According to De Niro, under no circumstances would United Artists accept Mardik Martin's script. The story was based on the vision of journalist Peter Hamill of a 1930s and 1940s style, when boxing was known as "the great dark prince of sports". De Niro was unimpressed when he finished reading the first draft, however. Taxi Driver screenwriter Paul Schrader was swiftly brought in to re-write the script around August 1978. Some of the changes that Schrader made to the script saw a re-write of the scene with the uncooked steak and inclusion of LaMotta seen masturbating in a Florida cell. The character of LaMotta's brother, Joey, was finally added, previously absent from Martin's script. United Artists saw a massive improvement on the quality of the script. However, its chief executives, Steven Bach and David Field, met up with Scorsese, De Niro, and producer Irwin Winkler in November 1978 to say they were worried that the content would be X-rated material and have no chance of finding an audience.

According to Scorsese, the script was left to him and De Niro, and they spent two and a half weeks on the island of Saint Martin, extensively re-building the content of the film. The most significant change would be the entire scene when LaMotta fixes his television and then accuses his wife of having an affair. Other changes included the removal of Jake and Joey's father; the reduction of organized crime's role in the story and a major re-write of LaMotta's fight with Tony Janiro. They were even responsible for the end sequence where LaMotta is all alone in his dressing room quoting the "I could have been a contender" scene from On the Waterfront. An extract of Richard III had been pondered but Michael Powell thought it would be a bad decision within the context of a film that was American. According to Steven Bach, the first two screenwriters (Mardick Martin and Paul Schrader) would receive credit but since there was no payment to the writer's guild on the script, De Niro and Scorsese's work would remain uncredited.

One of Scorsese's trademarks was casting many actors and actresses new to the profession, which on this occasion there would be no exception. De Niro, who was already committed to play Jake LaMotta, began to help Scorsese track down unfamiliar names to play his on-screen brother, Joey, and wife, Vickie. The role of Joey LaMotta was the first to be cast. De Niro was watching a low budget television film called The Death Collector when he saw the part of a young career criminal played by Joe Pesci (then an unknown and struggling actor) as an ideal candidate. Prior to receiving a call from De Niro and Scorsese for the proposal to star in the film, Pesci had not worked in film for four years and was running an Italian restaurant in New Jersey. Pesci initially claimed that it would have to be a good role for him to consider it, and he later accepted the part.