Veteran driver and former AIS champion Buddy Lazier won the race, his first career win in top-level Indy car competition, just over two months after he suffered a broken back in a crash at Phoenix.

Media attention of the open wheel "split" was highly critical going into the race, as a number of the IRL participants were ridiculed and the prestige of the Indianapolis 500 itself was brought into question.

In the early 1990s, newly named Indianapolis Motor Speedway president Tony George began exploring options of changes in the sport of Indy cars.

George joined the CART board of directors in 1992 as a non-voting member, but resigned in 1994 due to disagreements with the direction of the series and a lack of influence in prospective changes.

George blueprinted the new series as a lower-cost alternative to CART, with an emphasis on attracting American grassroots drivers, an all-oval schedule, and new cars from 1997 with normally-aspirated, "production-based" engines, targeting a reduction in performance.

Almost immediately, a turbulent political controversy erupted, with participants, media, fans, manufacturers, and sponsors all apprehensive of the sport's direction and pending shakeup.

[11][12] On December 18, 1995[13] CART teams, convinced they were being deliberately locked out from the 1996 Indy 500, and the victims of a "power grab" by Tony George,[14] announced their intentions to boycott the event.

EuroInternational, under their legal Osella USA name, and Burns Motorsports also filled entries for Russ Wicks and Jeff Wood, but neither team appeared during the month.

After the #2 car was forfeited due to Scott Brayton's death, only 21 of the 25 eligible "locked-in" entries were ready to qualify, leaving twelve at-large starting positions up for grabs.

A cool morning saw only half an hour of practice amongst nine cars, until rain closed the track for the day at 9:35 a.m.[22] Rookie Tony Stewart led the abbreviated session with an unrepresentative lap of 193.957 mph.

Several other drivers cracked the 230 mph barrier, including Buddy Lazier, Davy Jones, and Scott Sharp., while Stéphan Grégoire and Johnny Parsons made their first on-track appearances.

[32] With Buhl, 33 confirmed car-driver combinations had practiced before the start of Pole Day qualifying, although Joe Gosek and Justin Bell were still due to complete their rookie tests.

[33] During practice, Johnny O'Connell and Scott Harrington finally started their driver's test, the former having formalized his sponsorship on Pole Day morning,[33] and the latter on a shoestring budget.

[38] Johnny O'Connell (216.024 mph) led the non-qualified cars and passed his rookie test, with Tyce Carlson bringing the total to 16 later that day in the Loop Hole Racing entry assigned to Dan Drinan.

[41] Fermín Vélez completed his rookie test, while Billy Boat, freshly signed to drive Pagan's second car, and Andy Michner took their first practice laps of the month.

Earlier that day, veteran Danny Ongais, who had been confirmed on Thursday, took his first laps in the Brickell Racing machine, while Andy Michner, Joe Gosek and Rob Wilson became the last drivers to complete their rookie tests, bringing the total to 22.

At 9:35 a.m., Dan Drinan, who was unsuccessfully trying to improve his best lap of the month (215 mph) during the practice session, endured a heavy accident in turn 1, in a very similar fashion to Brayton's crash.

Five drivers completed a qualification attempt, including Johnny Parsons, who had his first on-track appearance since his Pole Day crash during practice, and went on to secure his place on the grid with minimal running.

During the day, Scott Harrington rejoined the queue, having struck a deal to drive in Della Penna's back-up, a car that Teo Fabi had driven to an 8th place finish in 1995.

After the death of polesitter Scott Brayton, his #32 entry (with Danny Ongais now assigned as the driver) moved to the back of the starting field and was withdrawn from the Pit Stop Challenge.

Tony Stewart (elevated to 1st on the starting grid), Davy Jones (2nd), Eliseo Salazar (3rd), Eddie Cheever (4th), and Roberto Guerrero (6th) ultimately accepted berths for the contest.

A conservative and ragged start saw Tony Stewart retain the lead into Turn 1, while Eliseo Salazar overcame Davy Jones for second, and Roberto Guerrero jumped Eddie Cheever and Buddy Lazier for fourth.

Tony Stewart set a rookie record by leading the first 31 laps before his first pit stop, somewhat earlier than the rest of the field, bringing up concerns over Team Menard's fuel mileage.

Another caution came out on Lap 50 after Johnny Parsons blew his engine, and Tony Stewart elected to pit again to rearrange his fuel situation, rejoining fourth, as well as Salazar.

Arie Luyendyk caught up with Buddy Lazier and both drivers engaged in close pursuit until the caution came out on Lap 94, when Brad Murphey crashed in Turn 2.

During the caution, Mike Groff, one of the lead runners in fifth place, suffered a broken oil line that spilled into his cockpit, managing to reach his pit box before rushing out of the car uninjured.

Pagan Racing still weren't sure on Guerrero, and made a final pit stop on Lap 167 to top off, but the refueler inserted the nozzle awkwardly, the fuel spilled, and the car caught fire.

Track crews quickly cleaned up the incident, and the race was restarted with one lap to go, the white and green flag being displayed at the starter's stand simultaneously.

[55] Due to the high attrition, and as the nearest contenders (Danny Ongais, Hideshi Matsuda and Robbie Buhl) were 3 laps down to them, all three drivers involved in the crash retained their positions.

Ford-Cosworth continued to focus on CART and Champ Car, being the lone engine supplier during the last years of the series, and ended its American open-wheel involvement after the 2008 unification.