Capitalize first letter of a defined variable

  \expandafter\MakeUppercase \mytext

Here's another approach:

\documentclass{article}

\usepackage{mfirstuc}

\begin{document}
  \def \mytext {hi how are you?}

  \xmakefirstuc{\mytext}
\end{document}

This works much like David's answer, but can also handle awkward cases where the text includes text-block formatting commands (where the first argument is the text that needs formatting). For example:

\documentclass{article}

\usepackage{mfirstuc}

\begin{document}
  \def \mytext {hi how are you?}

  \xmakefirstuc{\mytext}

  \def \mytext {\emph{hi} how are you?}

  \xmakefirstuc{\mytext}
\end{document}

In the second case above, it's effectively doing:

\emph{\MakeUppercase hi} how are you?

A simple \expandafter\MakeUppercase\mytext approach causes:

\MakeUppercase\emph{hi} how are you?

which doesn't work as it's attempting \MakeUppercase{\emph}.

The commands provided by mfirstuc don't work with declarations (such as \em or \itshape) as the package is designed for semantic markup not free-form formatting. You can use semantic markup to deal with quoted or parenthetical material. For example:

\documentclass{article}

\usepackage{mfirstuc}

\begin{document}

  \newcommand*{\qt}[1]{``#1''}

  \def \mytext {\qt{hi how are you?}}

  \xmakefirstuc{\mytext}
\end{document}

Another point to consider is whether or not you intend using UTF-8 characters with inputenc. This isn't a problem with XeLaTeX or LuaLaTeX, but with LaTeX the UTF-8 character is treated as two octets. For example:

\def \mytext {ĥi how are you?}
\expandafter\MakeUppercase\mytext

This causes the error:

! Argument of \UTFviii@two@octets has an extra }.

because \MakeUppercase has only grabbed the first octet. The same error occurs with \xmakefirstuc unless you load datatool-base (at least v2.24) after inputenc and before mfirstuc:

\documentclass{article}

\usepackage[utf8]{inputenc}
\usepackage{datatool-base}
\usepackage{mfirstuc}

\begin{document}

  \def \mytext {ĥi how are you?}

  \xmakefirstuc{\mytext}
\end{document}