This paper introduces GRACETOOLS, the first open source gravity field recovery tool using GRACE type satellite observations. Our aim is to initiate an open source GRACE data analysis platform, where the existing algorithms and codes for working with GRACE data are shared and improved. We describe the first release of GRACETOOLS that includes solving variational equations for gravity field recovery using GRACE range rate observations. All mathematical models are presented in a matrix format, with emphasis on state transition matrix, followed by details of the batch least squares algorithm. At the end, we demonstrate how GRACETOOLS works with simulated GRACE type observations. The first release of GRACETOOLS consist of all MATLAB M-files and is publicly available at Supplementary Materials.