The third Australian Grand Prix to be held at Adelaide and the final round of the 1987 Formula One season proved to be another eventful race. Gerhard Berger started from his third pole position of the year despite being ill during qualifying. The event had one vital missing ingredient in the form of Nigel Mansell, still recovering from his accident during qualifying for the 1987 Japanese Grand Prix. Standing in for Mansell at Williams was Italian veteran Riccardo Patrese, who was given special dispensation from Bernie Ecclestone of the Brabham team. The young Italian Stefano Modena replaced Patrese making his Formula One debut. At the green light, it was Nelson Piquet in his last race for Williams-Honda before moving to Lotus-Honda who got away best of all, darting past Berger to take the lead into the first chicane. Alessandro Nannini in the Minardi was out immediately after crashing into the wall. Berger, still oozing with confidence from his victory at the 1987 Japanese Grand Prix re-passed Piquet going into turn three. The Austrian then went on to lead until the chequered flag to claim his third Grand Prix victory. Behind Berger developed a sparkling battle between Piquet, Prost, Alboreto and Senna. Piquet pitted for new tyres and later retired leaving the other trio to fight over second position. Senna eventually made a break from Alboreto and Prost who were being held up by back markers. Alliot in particular proved difficult to pass. Due to brake failure, Prost slammed into the tyre wall and subsequently retired. He earlier jumped over a chicane when behind Alliot. Senna made a late charge in an attempt to catch Berger but the Austrian had enough in hand to respond despite having what appeared to be a dragging under-tray. Senna finished second but was later disqualified for technical infringements on his Lotus. Alboreto was promoted up to second to make it a Ferrari 1-2, the first since the 1985 Canadian Grand Prix.
Yannick Dalmas finished fifth but scored no points: he was racing in a second Lola car that wasn't eligible to score points because at the start of the season the team had only submitted an official entry for one car for the full championship.