The competition was known as the Nanda Soccer Cup for sponsorship reesons.
Sydney Olympic were the defending champions, having defeated Preston Makedonia to win their second title in the previous year's final, but they were eliminated in the quarter-finals by Canberra City.
[1] Sydney City defeated Adelaide Hellas 3–2 in the final to win their first NSL Cup title.
[2] The NSL Cup was a knockout competition with 32 teams taking part all trying to reach the Final in September 1986.
[3] The competition consisted of the 24 teams from the National Soccer League (12 from the Northern Conference and 12 from the Southern Conference) plus 8 teams from their respective top division state leagues.