The entry was as normal except that the Fittipaldi team, which was struggling for money, was not present because it did not have enough engines. Tyrrell had switched from Avon to Goodyear. The result of this was that Eddie Cheever failed to make the grid in the new Tyrrell 011. With Austria's extra altitude the turbocharged cars were at an advantage and René Arnoux and Alain Prost put their Renaults on the front row with Gilles Villeneuve's Ferrari third. Jacques Laffite was next up in the Talbot Ligier (powered by a Matra V12 engine) while Williams team mates Carlos Reutemann and Alan Jones were fifth and sixth. The top 10 was completed by Nelson Piquet (Brabham), Didier Pironi (Ferrari), Elio de Angelis (Lotus) and Riccardo Patrese (Arrows).

At the start Villeneuve blasted his Ferrari into the lead ahead of Prost, Arnoux and Pironi (who had made a fast start in his Ferrari). Villeneuve pushed too hard on the second lap and went off, rejoining in sixth place. This left Prost and Arnoux to pull away while Pironi's Ferrari provided a road block for those chasing. The cork stayed in the bottle until the ninth lap, by which time the Renaults had a lead of nearly 20secs. Laffite made it through and was followed by Piquet. Laffite began to close up but then the gap stabilized. Pironi dropped back behind the two Williams cars, Jones still leading Reutemann. By mid-distance Laffite was within striking distance of the Renaults and then Prost suffered a suspension failure and went out, allowing Arnoux to take the lead. On lap 39 Laffite finally managed to get ahead as the pair diced through traffic. Arnoux had to settle for second while third went to Piquet. Jones and Reutemann were fourth and fifth and the final point went to John Watson (McLaren).