When H�lio Gracie was 16 years old, he found the opportunity to teach a Jiu-Jitsu class, and this experience led him to develop Brazilian Jiu-Jitsu. The Director of the Bank of Brazil, Dr. Mario arrived for class as scheduled. The instructor Carlos was running late and was not present. H�lio offered to begin the class with the man. When the tardy Carlos arrived offering his apologies, the student assured him it was no problem, and actually requested that he be allowed to continue learning with H�lio instead. Carlos agreed to this and H�lio began as an instructor. H�lio realized however, even though he knew the techniques theoretically, in actuality, the moves were much harder to execute. Due to his smaller size, he realized many of the jiu-jitsu moves required brute strength that his physical nature did not allow. He began adapting the moves for his particular physical attributes, and through trial and error learned to maximize leverage, thus minimizing the force that needed to be exerted to execute the move. From these experiments, Gracie Jiu-Jitsu, formally Brazilian Jiu-Jitsu, was created. Using these new techniques, smaller and weaker opponents gained the capability to defend themselves and even defeat much larger opponents.

H�lio was involved in an attack on Luta-Livre teacher Manoel Rufino dos Santos in 1937, at the age of 24. In a Interview for Playboy Magazine he regretted that act with this statement:

H�lio was arrested and sentenced to two and a half years in jail. An appeal was made to the Supreme Court by H�lio's lawyer Romero Neto and the sentence was upheld, as the court said "Today it was with Manoel Rufini dos Santos. Tomorrow it will be us." A couple of hours after that decision Brazilian President Get�lio Vargas pardoned H�lio. According to H�lio, one of his students had a brother who was an ambassador and was very close to Get�lio, and he intervened in favor of H�lio. H�lio and Get�lio subsequently met many times and H�lio eventually taught Get�lio's son Maneco.

H�lio stated in an interview that he had around 15 fights. He began his fight career when he submitted professional boxer Antonio Portugal in 30 seconds in 1932. Also in 1932 he fought American professional wrestler Fred Ebert for fourteen 10 minute rounds until the event was stopped by the police. In 1934 H�lio fought professional wrestler Wladak Zbyszko, who was being billed as a "world champion", for three 10 minute rounds. That match was declared a draw. H�lio did win against Taro Miyake, a Japanese professional wrestler who worked for Ed "Strangler" Lewis in the U.S.

H�lio also fought in Brazilian Jiu-Jitsu vs. Judo matches. In 1932 he fought Japanese judoka Namiki. The fight ended in a draw, but according to the Gracies the bell rang just seconds before Namiki would have tapped out. H�lio had two fights with Japanese judoka Yasuichi Ono after Ono choked out H�lio's brother George Gracie in a match. Both fights ended in a draw. H�lio fought another Japanese judoka Kato twice. The first time was at Maracan� stadium and they went to a draw. Afterwards, H�lio asked for a rematch. The rematch was held at Ibirapuera Stadium in S�o Paulo and H�lio won by front choke from the guard. In 1955, H�lio went on to fight leading judoka Masahiko Kimura at Maracan� stadium with Kimura winning via bent arm lock. In 1994, H�lio admitted in an interview that he had in fact been choked unconscious earlier in the match, but had revived and continued fighting. In 1967, during a live television interview, Helio was challenged by capoeira practitioner Valdomiro. Helio, as always, accepted the challenge and defeated him via back choke on a live television program called "Desafio 67" that took place one week after the challenge was made.

H�lio shares the world record for the longest fight in history with his former student Valdemar Santana, a feat achieved when they spent 3 hours 40 minutes fighting with H�lio losing by technical knockout due to exhaustion. That fight was held at the YMCA in Rio de Janeiro in May, 1955.