The settlement is first mentioned in 1385. It still retains much of its historic character. One of the oldest surviving churches in Slovenia, the Church of St. Thomas, is located in the village. The Rateče (or Celovec) Manuscript, one of the earliest surviving Slovene texts, is thought to have been compiled in the Rateče area (possibly at St. Thomas') during the second half of the 14th century.
Other historic buildings include the late gothic parish church of the Holy Spirit, and an ethnographic museum in the Kajžnk House, a restored 19th-century farmhouse.
The creeks Trebiža and Kravnjak flow through the village. Their sources are on the slopes of the mountains Peč (1510 m) and Petelinjek (1552 m), constituting the extreme western part of the Karavanke range. Below the village and beside the main Jesenice-Trbiž road is the gravelly Ledine basin, where the Nadiža creek disappears underground. The creek flows from the glacial valley of Planica. At times of heavy precipitation a small lake forms in Ledine, from which water filters throgh the gravel to rise again at Zelenci, a marshy wetland with an extraordinarily rich ecosystem, regarded as the permanent source of the Sava Dolinka.
The village is surrounded by fields, meadows and pastures. Due to the sharp climate, the inhabitants concern themselves principally with livestock husbandry, relying on summer grazing in high pastures. Most local farmers are binational landowners, with meadows across the border in Italy.
Tourism is important to the local economy; there are many vacation houses in the area. Rateče is a starting point for mountaineering trips into the Julian Alps (through Tamar) and the Karavanke. The lower Planica valley hosts the famous ski jumps where both the 100 m and 200 m benchmarks were first broken (in 1936 and 1994 respectively). Near the border crossing there is "Macesnov'c" ski area, with a 1900 m track.