Rubinstein is the son of Polish parents. His mother, Aniela (née Młynarska), a dancer and writer, was a Roman Catholic native of Warsaw, the daughter of conductor Emil Młynarski. His father was Polish-Jewish concert pianist Arthur Rubinstein. He attended El Rodeo Public School in Beverly Hills (K–2), Cours La Cascade in Paris, France (1954), and St. Bernard's School (3–8) and Collegiate School (New York City) (9–12) in New York City. He studied theater and music at the University of California, Los Angeles (1964–1967), and later composition at the Juilliard School in New York.
He made his Broadway acting debut in 1972 and received a Theatre World Award for creating the title role in the musical Pippin, directed by Bob Fosse. In 1980 he won the Tony, Drama Desk, Los Angeles Drama Critics Circle, and Drama-Logue Awards for his portrayal of James Leeds in Mark Medoff's Children of a Lesser God, directed by Gordon Davidson.
Other Broadway appearances were in Neil Simon's Fools, directed by Mike Nichols, and Herman Wouk's The Caine Mutiny Court-Martial, which earned him a Drama Desk nomination; he replaced William Hurt as Eddie in David Rabe's Hurlyburly, replaced David Dukes in David Henry Hwang's M. Butterfly, and starred in Getting Away with Murder, by Stephen Sondheim and George Furth, directed by Jack O'Brien, and Ragtime, by Terrence McNally, Stephen Flaherty, and Lynn Ahrens. In 2014, he joined the Broadway cast of the hit revival of Pippin, directed by Diane Paulus, this time playing Pippin's father, Charlemagne; and subsequently repeated that role on the national tour throughout the United States and Japan in 2014–15.

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