Combine all ingredients in an electric blender, adding ice to 3 1/2 cup level. Process just until ice is finely crushed. Pour into a pitcher and serve immediately, or cover and freeze.
Note: For the freshest flavor, squeeze your own grapefruit juice. Try freezing juice in ice cube trays; add frozen cubes to blender.
Make Ahead: If you want slushy margaritas for a crowd, make several batches in advance and freeze until ready to serve. There's no need to thaw them; just stir and serve.