A native of St. Louis, Missouri, Dana graduated from the Medill School of Journalism at Northwestern University. Before his break he had worked as a mechanic, a private racing coach, a driving instructor, a PR & marketing account representative, and as an editor and journalist covering the sport. His work appeared in AutoWeek, Sports Illustrated and Maxim.
In 1996 Dana was working as a mechanic at the Bridgestone Racing School in Ontario when he won his first races there. In 1998 he moved to Indianapolis and began competing in Barber Dodge Pro Series, and his top 20 finish earned him an invitation to the inaugural Formula Dodge National Championship. He then competed in the Infiniti Pro Series where he captured one race win and placed second in the 2004 championship. He then secured sponsorship to run in the IndyCar Series with sponsorship from Ethanol suppliers, which he brought to Hemelgarn Racing.
After competing in 3 IndyCar Series events, Dana suffered a spinal fracture while practicing for the 2005 Indianapolis 500 and missed the rest of the season, replaced by Jimmy Kite. He returned to the series to race for Rahal Letterman Racing after he recovered from his injuries.
In the practice session for the first race of the 2006 IndyCar Series season, at Homestead-Miami Speedway, Dana collided with Ed Carpenter's disabled car after Carpenter's tire went flat, thrusting the car into retaining wall, before sliding to the bottom of the track. Paul Dana, in the Rahal-Letterman car, was told to "go low" by his spotter. Slow-motion footage showed that Dana had hit debris from Carpenter's car just before impact, which caused damage to the right-front suspension and prevented effective braking.
ABC/ESPN's telemetry indicated Dana's car hit Carpenter's car at about 176 mph, while Scott Sharp, who was running alongside Dana, reported that he had slowed to approximately 50 mph by the time of Dana's impact.
Dana was transported to Jackson Memorial Hospital, where he succumbed to his injuries just before noon. He was 30 years old, and is survived by his wife Tonya.
On his March 27, 2006 television show, an emotional David Letterman paused to offer his condolences to Paul Dana's family; "It's not hard to imagine the despair and sorrow that Paul Dana's wife, Tonya, and the rest of his family are feeling now, and I want them to know that they have the thoughts and the prayers of myself, the entire Rahal-Letterman team, and the entire racing community and, hopefully, that will give them the slightest amount of comfort. I did not know Paul personally but we were all proud to have him on our team and are deeply saddened by his tragic passing at such a young age."