During his active career, he was a forward for Danish clubs Køge, Herfølge, Frem and Brøndby. In 1984, Rasmussen moved to the United States and signed with the Wichita Wings of the Major Indoor Soccer League. He played five seasons for the Wings. In 1988, he was the league's points leader and was named the MISL MVP. In September 1989, but returned to Denmark and signed with Brondby in order to make himself available to play for the national team. In January 1998, he returned to the Wichita Wings who were now playing in the National Professional Soccer League. He played for the Wings through the 1998–1999 season. In June 1999, he then moved to the Baltimore Blast.
After retiring, he managed a number of Danish lower league clubs. In January 2004, he replaced Troels Bech as manager of Midtjylland in the top-flight Danish Superliga. In Midtjylland he led the team to a silver medal in the Danish Superliga 2006-07. On 6 March 2008, he published he would leave Midtjylland at the end of the season for personal reasons. He took some time off going back to USA and with no active participation in football, except from being a pundit on Danish TV on some occasions. On 1 January 2009 he started as head coach for AGF. After a good start of the 2009/2010-season, AGF had a terrible spring that ended up in relegation to the Danish 1st Division. Four days after the season had ended Rasmussen was sacked.