Damon Hill set the qualifying pace and put his Williams on pole with a time of 1.15.505 which he set on Friday. His Williams team mate Coulthard was second with Schumacher in third.

Coulthard got a flying start and went into the lead for the first corner, Alesi and Berger both got ahead of Schumacher. By the end of the first lap Schumacher had passed Alesi and was pressing Berger.

Coulthard set the early pace with fastest laps on lap 3 (1.18.300) and lap 5 (1.18.025).

Damon Hill then took started to charge and set the fastest lap on lap 7 (1.17.950). Schumacher managed to pass Berger and was around 11 seconds behind Hill. On lap 17 Hill again set a fastest lap (1.17.943) and Inoue spun out.

Lap 19 was the start of the first pit stops, and David Coultard ended his Australian GP in bizarre fashion when he failed to turn at the end of the pit entry and crashed into the wall destroying the front left wheel of his Williams.

Lap 25 saw Schumacher pit and exit just behind Alesi, Schumacher managed to pass Alesi, but somehow Alesi turned into the German and his front wheel hit the Germans Left rear. Alesi was forced to pit for a new nose cone and Schumacher pitted so that the Benetton mechanics could check his car.

Schumacher came into the pits again on lap 26 as Alesi retired. On lap 27 Schumacher came into the pits for a third time and retired.

By lap 29 Hill had a 33 Second lead over Herbert. By lap 33 this had increased to 48 seconds. On lap 39 Gerhard Bergers engine blew, thus ending his Australian GP and his career with Ferrari. By Lap 41 Hill had a 1 Minute 12 Second lead over Herbert and had lapped the third place driver.

By Lap 56 Hill had lapped everyone and there were only 10 cars left on the track. Eddie Irvine retired on lap 67 with pneumatic valve failure, and Johnny Herberts car came to a halt on lap 71 with the rear end on fire!!.

On lap 75 Katayama's engine gave out leaving 7 cars running. The last three laps saw Hill lap second placed Olivier Panis for the second time.

Panis struggled round for three laps with a heavily smoking Mugen engine which looked likely to blow at any second. Amazingly he managed to finish the race and hold on to his second place. Morbidelli finished third in the first Arrows podium finish for 7 years (Eddie Cheever 1988 Italian GP), Mark Blundell was fourth in the sole McLaren, Mika Salo finished fifth in the Tyrrell and Minardi scored their first points with a sixth place for Pedro Lamy.