After the Japanese GP Alain Prost was told by Ferrari that his services would not be required in Australia and that he would not be driving for the team in 1992. The announcement came after months of tension within the team. The decision to fire Prost was taken because of public criticism of the team. This opened the way for Gianni Morbidelli to drive for Ferrari and his drive at Minardi was passed on to Roberto Moreno. Éric Bernard was out of action with leg injuries and so Gerard Larrousse agreed to let Bertrand Gachot try to revive his F1 career (which had been interrupted by a stretch in prison that summer) in exchange for some much-needed sponsorship money. Gachot failed to qualify while regular driver Aguri Suzuki also missed out after a huge accident on Friday.

Qualifying resulted in a dominant showing for the McLaren-Hondas of new World Champion Ayrton Senna and Gerhard Berger. Nigel Mansell and Riccardo Patrese were third and fourth in their Williams-Renaults while the third row was shared by Nelson Piquet and Michael Schumacher and the fourth by the Ferraris of Jean Alési and Morbidelli. The top 10 was completed by the Tyrrell-Honda of Stefano Modena and Pierluigi Martini's Minardi-Ferrari.

In the hour before the race began the rain started to fall and conditions became so bad that the start was delayed. Eventually it was decided that the race should go ahead as the rain had eased a little and at the start Senna and Berger went into the lead. Mansell was third and Schumacher fourth. Mansell moved ahead of Berger in the course of the third lap. On the fifth lap the two Benettons collided and Schumacher spun. He was then hit by Alési's Ferrari and the Modena Lamborghini of Nicola Larini. Not long afterwards Martini also spun into a wall.

The rain was getting worse, however, and on lap 13 Maurício Gugelmin crashed his Leyton House into the pitlane, slightly injuring two marshals. Mansell and Berger both spun out and, with Senna waving that the race should be stopped, the red flags were shown. The rain continued to lash down and eventually the race was declared over with half points being awarded. Piquet was fourth, Patrese fifth and Morbidelli sixth.