It began on 4 December 1985 with the preliminary round and concluded on 23 June 1986 with the final which was held at Tsirion Stadium.
In the preliminary round each tie was played as a single leg and was held at the home ground of one of the two teams, according to the draw results.
If both teams had scored the same number of home and away goals, then extra time was following after the end of the second leg match.
If there weren't scored any goals during extra time, the qualifying team was determined by penalty shoot-out.
Before the start of 1985–86 season, the Cypriot Second Division club Orfeas Athienou was expelled from Cyprus Football Association after they were accused of bribing an opponent goalkeeper.
So, play-off matches were played to determine which team would take Orfeas's place in the Cypriot Second Division.