Tracee was a young dancer who worked at the Bada Bing strip club. Her boss was Silvio Dante, the owner of the Bing, who extended credit to many of his dancers who wished to undergo breast augmentation. Silvio commented that Tracee had a nice body but poor teeth, and she'd run up a debt with Silvio for orthodontia to straighten her jagged teeth.
Only twenty years old, she already had a son, who was taken by child protective services after she burnt him with cigarettes, blaming her abusive behavior on a "lot of repressed anger" which could be traced back to her own abusive upbringing. She was dating Ralph Cifaretto and got pregnant with his child.
One day at The Bing, Tracee expressed her thanks to Tony by giving him some homemade bread for advising her to take her sick son to the doctor, but Tony firmly reminded her that he was a superior like Silvio. This did not stop Tracee from seeking his advice on whether to have an abortion or to keep the baby after she begged Tony that she had one else to turn to. Tony recommended the abortion (despite his purported Catholicism) when saying that Ralph does not exactly have the reputation of Ozzie Nelson or Robert Altman, and would probably be a deadbeat.
Later, Tracee missed work, and Silvio hunted her down to find her waiting on Ralph hand and foot. As Silvio forced her into his car, he slapped her and threatened Tracee, telling her she is forced to be a dancer until the debt for her braces is repaid. Rather than confront Silvio about abusing Tracee, Ralph watched from the window laughing uncontrollably.
Three days later, after no contact between the two, Tracee met Ralph at the Bada Bing VIP lounge, where she insulted him in front of the other associates and capos. Ralph followed her out to the deserted parking lot, where he sounded proud of her pregnancy and promised to marry her, buy a house for her and do extra work so Tracee could rest in the advanced stages of the pregnancy. This caused Tracee's disposition to soften and that she was glad to have found a "1950s dad". Ralph also commented that they will think of names dependent on the baby's sex: Ralph if it is a boy and Tracee if it a girl.
But he then abruptly changed his tone and gleefully made snide remarks that her daughter would end up as a "cocksucking slob" just like her and that there is no way on Earth he would pay a penny or lift a finger to help her. Outraged, Tracee slapped him and insulted his masculinity, which led to Ralph brutally beating her to death. When Tony found out about this, he assaulted Ralph, violating a well-established Mafia code according to which made men were never to strike one another.
Tony attempted to justify his actions by stating that Ralph "disrespected the Bing". When asked about his opinion on the incident by Tony, Silvio said that Tony would only have been able to physically retaliate if it had involved a mistress or a blood relative, and since Tracee was neither Ralph had a legitimate complaint against Tony and was owed an apology. Although Tony is disappointed that he cannot retaliate against Ralph, Silvio is also angry at Tracee's murder (more likely that Tracee got out of her debt bondage to him when she died) and says some punishment is justified, and tells Tony that Ralph is now banned from the Bada Bing.
Tracee's murder would have some effect on Tony's psyche, as he reports on the depression to Dr. Melfi, but lies that a teenage boy employed with Barone Sanitation died in an accident as Carmela was in joint therapy with him. During Thanksgiving dinner, when Tony sees Meadow in the kitchen, he has a momentary vision of Tracee, arguably as Meadow and Tracee were not that far apart in age. Tony apologizes for the recent rifts between them, and Meadow is more receptive, considering her recent breakup with Noah.
After the death of Gigi Cestone, Ralph is clearly the most qualified soldier to become the new capo. Ralph accepts his new position by admitting "I disrespected the Bing", a clear allusion to murdering Tracee.
Some time later when Tony kills Ralph in "Whoever Did This", he wakes up in the Bing the morning after the murder and sees a picture of a smiling Tracee on a mirror - the implication being he ultimately avenged her murder, albeit for different reasons at the time.