Rocket Raccoon is the chief law officer of Halfworld, a planet converted by a race of alien humanoids to house and treat the mentally ill. The project was eventually abandoned, and the planet was soon abandoned, leaving the patients and the robotic assisstants of the asylum behind. These robots soon gained sentience due to radiation from the death of a nearby star. They used genetic engineering to give intelligence to the animals left by the alien humanoids, leaving these animals to care for the planet's patients. The robots relocated to the far side of the planet and clear out all the wildlife for industrial purposes, including the construction of a spacecraft called the Ship. The half-industrial, half-natural feature of the planet gave it its current name: Halfworld.
Toys were the main source of entertainment for the mentally ill humanoids, so the animals made sure that new toys are continuously produced. Toy factories were set up, and following a conflict between two companies, the Toy War ensued. Rocket Raccoon remained neutral throughout the war. With the help of the robots, he creates helmets that would cure the humanoids. Him and most of the other animals and robots left the planet on the Ship, exploring more of the universe.
Rocket Raccoon has the abilities of a regular raccoon from Earth, but has highly heightened intelligence. In fact, he has shown to be a great military tactician. His senses are much stronger than those of a normal human, owing to his species. In Ultimate Marvel vs. Capcom 3, Rocket Raccoon has a whole bunch of traps and weaponry. He can also tunnel through the ground like a normal raccon and even hover in the air.