Alan Bond's Australia II pulled off a major upset by winning the series from Conner's Liberty to become the first success in twenty-five challenges for the Cup.

The New York Yacht Club had previously built the longest winning streak in international sporting history, having successfully defended the trophy over 132 years.

[6] It was in this context that the 1987 America's Cup was seen as the best opportunity yet for a successful challenge, as the event was now outside the control of the NYYC and held in a location with strong but variable breezes, unlike the predictable and placid winds off Rhode Island.

[7] Private investment and public infrastructure redevelopment commenced on a massive scale in anticipation of a large influx of visitors arriving to watch the event.

Home of the America's Cup[11]: 171  In 1985 and 1986 changes in liquor laws and trading hours regulations were made to expand services for visitors.

[13] A Festival of Sport was conducted in late 1986 and early 1987 which included a cricket Test[14] and One Day International tournament, athletics, hockey, basketball, squash, golf, racing, trotting, cycling, football, baseball, fishing (MAAC Blue Water Fishing Classic), lawn bowls, karate and kick-boxing competitions.

[8][15] A heavy-weight boxing title fight[citation needed] and a World Sprint Car Championship were held in early January.

[16] The cruise ship Achille Lauro was chartered by a private group for the duration of the series, to act as a viewing platform and accommodation for 1,400 visitors.

[18] A dozen syndicates competed, mainly as a shakedown series to determine their relative competitiveness and to train crews for the anticipated heavy conditions.

The New Zealand challenge boat KZ 5, a fibreglass-hull Bruce Farr design, came in second, with the New York Yacht Club entrant America II third.

After a series of round robin races, a Defender Finals contest was sailed between Alan Bond's Australia IV and Kookaburra III of Kevin Parry's Taskforce 87 syndicate, with Kookaburra III sweeping the finals five races to nil to win the Defender selection process.