With MontjuïcPark banished from the World Championship after the disastrous event in 1975, the Spanish GP found a permanent home at Járama. The first European race of the year resulted in a bumper entry of cars with a total of 31 appearing, compared to the 22 which had been in action in Long Beach five weeks earlier. Of the regulars, Ian Scheckter was back in the March team while Brian Henton had moved to a customer car. Hesketh reappeared with two new Frank Dernie-designed 308E chassis for Rupert Keegan and Harald Ertl. Frank Williams, who had started his own team (Williams Grand Prix Engineering) after falling out with Walter Wolf entered an old March in the colors of Belle-Vue beer and Saudia Airlines. David Purley appeared in his own Mike Pilbeam-designed Lec, which had been debuted at the Race of Champions. The Stanley BRM team was back in action but had Conny Andersson in place of Larry Perkins while Arturo Merzario had started his own team and bought a March 761 while Emilio de Villota had acquired an old McLaren M23.

Qualifying resulted in Mario Andretti taking pole comfortably in the Lotus 78 (the team beginning to master the delicate science of ground-effect aerodynamics) with Jacques Laffite's Ligier second and Niki Lauda's Ferrari third, alongside Carlos Reutemann's similar car. The third row featured Jody Scheckter (Wolf) and John Watson (Brabham-Alfa Romeo) while James Hunt was seventh in his McLaren M26, just ahead of Clay Regazzoni's Ensign. Then came Jochen Mass in the second McLaren and the Tyrrell of Patrick Depailler. Jean-Pierre Jarier was a surprise non-qualifier in the ATS Penske after a combination of gearbox trouble and food poisoning.

On Sunday morning Lauda came in during the warm-up complaining of extreme pain and was taken off to hospital where it was found that one of his broken ribs from the Nürburgring accident has snapped when he went over a bump. He was out of action.

At the start Andretti took the lead and remained ahead for the rest of the afternoon to win a dominant victory for Team Lotus. In the early laps he was chased by Laffite but the Frenchman had to pit because a rear wheel was coming loose and so Reutemann moved to second and stayed there. Hunt dropped out early with a misfire and Watson ran third for a time before a spin dropped him back behind Scheckter and Mass. Watson later retired with fuel problems and so fifth place went to Gunnar Nilsson in the second Lotus and sixth to Stuck in the second Brabham.