The organizers of races at the Zeltweg airfield had been trying to get a World Championship Grand Prix since the late 1950s and after two non-championship races in 1961 (won by Innes Ireland in a Lotus) and 1963 (won by Jack Brabham) they finally got what they wanted. The teams arrived having heard that the track was extremely bumpy and practice confirmed that this was the case with various drivers suffering suspension failures as a result. After practice Graham Hill was fastest in his BRM and shared the front row of the 4-3-4 grid with John Surtees in his Ferrari, Jim Clark's Lotus and Dan Gurney's Brabham. Richie Ginther (BRM), Jack Brabham (Brabham) and Lorenzo Bandini in the second Ferrari shared the second row. There was one notable addition to the field, local rising star Jochen Rindt making his Grand Prix debut in a Rob Walker Brabham at the age of 22.

At the start of the race both Clark and Graham Hill were left behind, Clark because of a gear selection problem and Hill with excessive wheelspin. Also in trouble was Jack Brabham who pitted with a fuel-feed problem. As a result Gurney was in the lead until Surtees got ahead on the second lap. Bandini was third and there was a lively battle for fourth. Clark joined this as he fought back but Graham Hill's race ended with an electrical problem soon afterwards. Surtees soon disappeared when his Ferrari's rear suspension collapsed and so Gurney was left alone in the lead a long way clear of Bandini with Clark soon up into third place. Clark chased after Bandini and took second on the ninth lap but he was unable to close the gap to Gurney by more than a tenth here and there. Mike Spence in the second Lotus made a good impression as he worked his way up to fifth but at almost the same time both he and Clark went out with broken driveshafts, leaving Gurney in a solid lead with Bandini second and Ginther third. On lap 47 Gurney suddenly slowed with a front suspension failure and so Bandini was left in the lead. with only Ginther and Jo Bonnier (in his Rob Walker Brabham) on the same lap. Innes Ireland fourth in the BRP.

There was a dramatic moment when Phil Hill crashed his Cooper on lap 59. The car caught fire and burned out. Bonnier's engine began to suffer from a misfire and he dropped back and so third place was inherited by Bob Anderson's private Brabham which was three laps behind the leaders. Bandini duly won his first (and only) World Championship victory with Ginther second and Anderson third.