The two-week gap between the French and German GPs saw some more changes in the driver lineup with Nigel Mansell back in action in the second Lotus, having missed the French GP because of a wrist injury. Jochen Mass was also out of action after his huge accident at Paul Ricard and so Rupert Keegan was in the second March. Theodore has also decided to drop Jan Lammers and put British Formula 3 ace Tommy Byrne into the car instead.

Friday practice was dry and World Championship leader Didier Pironi was pole in his Ferrari but on Saturday it rained and in the morning session Pironi was lapping quickly when it ran into the back of Alain Prost's Renault, thinking that a cloud of spray had contained only Derek Daly's Williams. The Ferrari flew but fortunately for Pironi landed tail-first. It then somersaulted down the road. The car landed on its wheels but then smashed into the barriers nose-first. Pironi was very seriously injured but at least he was alive. He would undergo a long series of leg operations but would never race in F1 again. It was a desperate blow for Ferrari, which had already suffered the loss of Gilles Villeneuve just three months earlier.

The pole position slot was left open because Ferrari never withdrew Pironi. Second and third were the Renaults of Alain Prost and René Arnoux with Nelson Piquet third in his Brabham-BMW and Patrick Tambay fourth in the second Ferrari. Then came Riccardo Patrese's Brabham-BMW and Michele Alboreto (Tyrrell) in the first of the normally-aspirated cars. Behind him were Andrea de Cesaris (Alfa Romeo), Keke Rosberg (Williams) and John Watson (McLaren).

At the start everyone expected Piquet to go into the lead as Brabham was still planning to use its new pit stop strategy. Sure enough he was ahead by the end of the first lap and pulling away from Arnoux, Prost Tambay, de Cesaris and Patrese. Prost faded quickly behind Tambay and went out after 14 laps with an injection problem while Tambay also moved ahead of Arnoux on lap 10. Three laps later Patrese's race ended with engine failure. But all seemed to be going well for Piquet until the 19th lap when he tried to lap Eliseo Salazar in the ATS. The two cars collided and an irate Piquet proceeded to attack the Chilean driver.

This left Tambay and Arnoux ahead of Watson, Rosberg and Alboreto but Jacques Laffite made rapid progress in his Talbot Ligier to pass both the Tyrrell and the Williams. The Frenchman then slid wide, damaged a skirt and began to drop back. On lap 37 Watson disappeared from third place with a suspension failure.

Tambay thus won his Grand Prix victory, giving the Ferrari team a much-needed boost. Arnoux was second with Rosberg third, Alboreto fourth, Bruno Giacomelli (Alfa Romeo) fifth and Marc Surer (Arrows) sixth.