During Domenici's tenure in the Senate, he advocated waterway usage fees, nuclear power, and related causes. However, in recent years, his environmental record has been heavily criticized, he had been involved in a scandal involving the dismissal of U.S. attorneys, and he had dwindling approvals in his sixth term. Domenici announced on October 4, 2007 his decision not to seek re-election to the Senate in 2008 for health reasons, in particular frontotemporal lobar degeneration.

Domenici was born in Albuquerque, New Mexico, USA, to Italian-American parents Alda Vichi, an illegal immigrant, and Cherubino Domenici, who were born in Sorbarro, Italy. Growing up, he worked in his father's grocery business after school. He graduated in 1950 from St. Mary's High School in Albuquerque. After earning a degree in education at the University of New Mexico in 1954, where he was a member of Sigma Alpha Epsilon fraternity, he pitched for one season for the Albuquerque Dukes, a farm club for the Brooklyn Dodgers. He taught mathematics at Garfield Junior High in Albuquerque. He earned his law degree at the University of Denver in 1958 and returned to practice law in Albuquerque.

After graduating, he married Nancy Burk. Together they have two sons and six daughters (Lisa, Peter, Nella, Clare, David, Nanette, and twins Paula and Helen). One of his daughters has schizophrenia. This reportedly influenced his decision to become a strong supporter of legislation that calls for parity in insurance coverage for mental illness.

In 1966, Domenici successfully ran for a position on the Albuquerque City Commission and in 1968 was elected Commission Chairman. This position was equivalent to that of mayor under the structure of the city government at the time. Albuquerque since has changed to a popularly elected mayor position resulting from city wide balloting and a move beyond the internal appointment.

Domenici was unsuccessful in his 1970 attempt in New Mexico's governor's race, losing to Democrat Bruce King, 148,835 to 134,640.

In 1972, Domenici successfully ran for a position in the U.S. Senate and became the first New Mexico Republican to be elected to the position in 38 years. He was aided by his Hispanic-sounding surname with many New Mexico voters and the Richard Nixon landslide win over Democrat U.S. Sen. George McGovern at the top of the ticket. Domenici polled 204,253 votes (54 percent) to 173,815 (46 percent) for Hobbs real estate company owner Democrat Jack Daniels.

One of the first issues that Pete Domenici concerned himself with was waterway usage fees in spite of his state lacking any waterway capable of commercial traffic. The idea behind a waterway usage fee was that the Army Corps of Engineers built dams and other expensive waterway projects, which the barge industry got to use for free. A waterway usage fee would charge the users of waterways with a fee that would then be spent on upkeep and the construction of more waterways. In 1977, Domenici set himself to the task of enacting a waterway usage fee. After a long two-year battle with stiff lobbying on both sides, the waterway fee was finally passed along with a new lock and dam project (the rebuilding of Lock and Dam 26.) Reporters attributed the passage of this fee to, in no small part, Domenici's legislative skill. The legislation was signed by President Jimmy Carter in 1978.

The issue greatly assisted Domenici at home, where the railroad industry was big (railroads competed with barges, and they long wanted to end the "free ride" issue.) The railroads donated $40,000 to Domenici's campaign, and the barge industry gave a small sum to his opponent. He was reelected in 1978 with 53.4% of the vote over Democrat Toney Anaya, a former New Mexico Attorney General. The 6.8% victory margin would be Domenici's closest election in his Senate career.

Domenici was subsequently re-elected in 1984, 1990, 1996, and 2002 and is the longest-serving senator in his state's history. At the time of his retirement, he was the ranking member of the U.S. Senate Committee on Energy and Natural Resources and the U.S. Senate Appropriations Subcommittee on Energy and Water Development. He was also a member of the U.S. Senate Committees on Appropriations, Budget, and Indian Affairs. He advocated for the mentally ill, having pushed the Mental Health Parity Act of 1996.

Domenici has been an avid proponent of nuclear power and has published two books on the subject: "A Brighter Tomorrow: Fulfilling the Promise of Nuclear Energy" (Lanham, Maryland: Rowman & Littlefield Publishers, 2004), which he wrote; and "Advanced Nuclear Technologies — Hearing Before the Committee on Appropriations, U.S. Senate" (Collingdale, Pennsylvania: D I A N E Publishing Company, 1999), which he edited.