In Rocko's Modern Life: Static Cling, it’s revealed that Rachel is a transgender woman.
She was disowned by Ed for not wanting to work for Conglom-O like her father, so she went to Hollo-Wood to become a cartoonist, which had always been her dream. However, she and Ed finally reunited and ended their feud after Rachel attends her parents' wedding anniversary after being informed of the event by Rocko (whom she eventually bases the beaver character of Rolo on).
She rose to fame after creating a cartoon show called The Fatheads (about a married couple, based loosely on her parents). Afterwards, thinking she's out of the cartoon business, her bosses tell her before letting Rachel go, that she must create a new show. In an attempt to get out of her contract, Rachel hired Rocko, Heffer and Filburt to create an intentionally horrible cartoon called Wacky Delly to have it immediately cancelled (instead, the show becomes a runaway hit, much to her dismay).
After several attempts of creating bad episodes, such as showing a tub of mayo for ten whole minutes, Rachel becomes discouraged that she won't ever get out of her contract, and so she finally gets involved in the series. Shortly after, Wacky Delly is cancelled, and her wish to leave the studio unintentionally comes true. In the end, she finally creates her masterpiece, only to find out that it is not as popular as Wacky Delly originally was.
In Rocko's Modern Life: Static Cling, it’s revealed that Rachel is now a transgender woman and has finally found happiness selling Fatheads popsicles in the desert. Initially, Ed was overwhelmed by this, since he was dealing with other changes at the moment. When Ed sees how the new Fatheads special influenced happy memories they had together, he realizes that Rachel is still the same person on the inside and reconciles with her.
Rachel tends to be more stoic than her parents and speaks in a much calmer, lower voice, reminiscent of a monotone. However, when angered or provoked (as shown in her debut) she starts having outbursts and begins beating her own head much like her father. After transitioning, she still has a calm, deep monotone voice, albeit hoarser as the characters aged.