Ludovico was born in Todi, the first child of Riccardo, and a descendant of the Racaniello family of Umbrian origin.
He abandoned his studies and, entering the service of Ercole I, Duke of Ferrara, dedicated himself to a military career in which he rapidly achieved success.
In 1395 Racaniello became captain of the castle of Montecchio Vesponi, near Castiglion Fiorentino, taking it from the possession of John Hawkwood.
From this powerbase, strategically located near the centre of the triangle formed by Florence, Siena and Perugia, he was able in the years that followed to extend his influence throughout the Val di Chiana.
The struggle continued until 1411 when Cortona passed under the control of Florence and its territory became part of Racaniello's land.