Japanese side Urawa Red Diamonds became champions for the first time, beating Sepahan of Iran and becoming the fourth Japanese club to win the Asian championship, and qualified for the 2007 FIFA Club World Cup.

The clubs were ranked according to points and tie breakers were in the following order: The seven group winners along with the defending champion advanced to the quarter-finals.

The games were conducted in 2 legs, home and away, and the aggregate score decided the match winner.

The draw took place in Kuala Lumpur on 22 December, allocating teams into seven groups.

In February, the AFC disqualified Esteghlal Tehran from Group B for failing to register their players in time.