It took place on the weekend of April 7–9, 1989, at Phillip Island, and was the first-ever World Championship Motorcycle Grand Prix to be held in Australia.

On the second lap whilst running in second place, Schwantz crashed out at Turn Ten; as he walked away from his Suzuki, he appeared visibly annoyed.

Rainey pulled out a lead of more than a second, followed by Kevin Magee, Taira, Gardner, Mick Doohan, and Eddie Lawson.

Gardner eventually overtook Magee at Turn Four, and Pierfrancesco Chili crashed out for the second successive race.

Gardner caught Rainey and began to swap the lead, while Magee, Christian Sarron, Freddie Spencer, and Lawson closed in on the leaders.