Letelier was born in Temuco, Chile, the youngest child of Orlando Letelier Ruiz and Inés del Solar. He studied at the Instituto Nacional and, at the age of sixteen, was accepted as a cadet at the Chilean Military Academy, where he completed his secondary studies. Later, he abandoned a military career. He did not finish college and never received a university degree. In 1955, he joined the recently formed Copper Office (Departamento del Cobre, now CODELCO), where he worked until 1959 as a research analyst in the copper industry.

On 17 December 1955, Letelier married Isabel Margarita Morel Gumucio with whom he had four children: Cristián, José, Francisco, and Juan Pablo.

While at university, Letelier became a student representative in the University of Chile’s Student Union. In 1959, he joined the Chilean Socialist Party (PS). In 1971, President Allende appointed him ambassador to the United States. His specific mission was to advocate in defense of the Chilean nationalization of copper, which had replaced the private ownership model favoured by the US government.

In 1973, Letelier was recalled to Chile and served successively as Minister of Foreign Affairs, the Interior and Defense.

In the coup d’état of 11 September 1973, he was the first high-ranking member of the Allende administration to be arrested. He was held for twelve months in various concentration camps and suffered severe torture: first at the Tacna Regiment, then at the Military Academy; later he was sent for eight months to a political prison on Dawson Island; from there he was transferred to the basement of the Air Force War Academy, and finally to the concentration camp of Ritoque. Following international diplomatic pressure, especially from Diego Arria, then Governor of Distrito Federal of Venezuela, he was released in September 1974 on the condition that he immediately leave Chile.

In 1975, Letelier moved to Washington D.C., where he became senior fellow of the Washington, D.C.-based Institute for Policy Studies, a think tank Landau was involved in. Letelier became director of the Amsterdam-based Transnational Institute and taught at the School of International Service of the American University in Washington, D.C.

This economic model was used to great effect in Chile where General Pinochet sought to dismantle the country’s socialist economic system and replace it with a free market economy. Letelier believed that in a resource driven economy such as Chile, allowing markets to operate freely simply guaranteed the movement of wealth from the lower and middle classes to the monopolists and financial speculators. He soon became the leading voice of the Chilean resistance, preventing several loans (especially from Europe) from being awarded to the Chilean government. On 10 September 1976, he was stripped of his Chilean nationality.

Letelier was killed by a car bomb explosion on 21 September 1976 in Sheridan Circle in Washington, D.C., along with his American co-worker, Ronni Karpen Moffitt.

Moffit’s husband, Michael Moffitt, was injured but survived. Several people were prosecuted and convicted for the murder. Among them were Michael Townley, a U.S. expatriate working for DINA, General Manuel Contreras, former head of DINA, and Brigadier Pedro Espinoza, also formerly of DINA. Townley was convicted in the United States in 1978 and served 62 months in prison for the murder; he is now free as a participant in the United States Federal Witness Protection Program. Contreras and Espinoza were convicted in Chile in 1993.

According to the IPS, the Clinton administration de-classified more than 16,000 documents relating to Chile, but withheld documents relating to the Letelier-Moffitt assassination in Washington on the grounds that they were associated with an ongoing investigation. The IPS said the Clinton administration had re-opened the investigation into the Letelier-Moffitt murders and sent agents to Chile to gather additional evidence that Pinochet had authorized the crime. The former Chilean Secret Police Chief, Manuel Contreras, who, was convicted for his role in the crime in 1993, later pointed the finger at his superiors, claiming that all relevant orders had come from Pinochet.

General Augusto Pinochet, who died on 10 December 2006, was never brought to trial for the murders, despite evidence implicating him as having ordered them. Following the assassination, the United States cut military aid to Chile, and took a stance of ‘unobtrusiveness’ within the country.

Following the death of Pinochet in December 2006, the Institute for Policy Studies (IPS), for which both Letelier and Moffitt worked, called for the release of all classified documents relating to the Letelier–Moffitt assassination.

During the tenure of Richard Downie at the William J. Perry Center for Hemispheric Defense Studies, a U.S. Southern Command educational institution located at the National Defense University, the alleged (and as yet unproven) role of Jaime Garcia Covarrubias, a Chilean professor who was head of counterintelligence for DINA in the 1970s, in the torture and murder of seven detainees was revealed inside the center. His alleged role was first brought to Downie’s attention in early 2008 by Center Assistant Professor Martin Edwin Andersen, a senior staff member who earlier, as a senior advisor for policy planning at the Criminal Division of the U.S. Department of Justice, was the first national security whistleblower to receive the U.S. Office of Special Counsel’s “Public Servant Award.” In an October 1987 investigative report in The Nation, Andersen broke the story of how, in a June 1976 meeting in the Hotel Carrera in Santiago, Kissinger gave the bloody military junta in neighboring Argentina the “green light” for their own dirty “war.”

A US State Department document made available by the National Security Archive on 10 April 2010 reveals that a démarche protesting Pinochet’s Operation Condor assassination program was proposed and sent on 23 August 1976 to US diplomatic missions in Uruguay, Argentina, and Chile to be delivered to their host governments but later rescinded on 16 September 1976 by Henry Kissinger, following concerns raised by US ambassadors assigned there of both personal safety and a likely diplomatic contretemps. Five days later, the Letelier assassination took place.

Documents released in 2015 revealed a CIA report dated 28 April 1978, which showed that the agency by then had knowledge that Pinochet ordered the murders. The report stated, “Contreras told a confidante he authorized the assassination of Letelier on orders from Pinochet.” A State Department document also referred to eight separate CIA reports from around the same date, each sourced to “extremely sensitive informants” who provided evidence of Pinochet’s direct involvement in ordering the assassination and in directing the subsequent cover-up.