The new circuit was received with widespread enthusiasm from drivers and team personnel. Wound through city streets, parkland, and across Victoria Park Racecourse adjacent to the Adelaide central business district, it offered a wider and faster character than other street venues such as Monaco or Detroit. A 900-metre straight named the Brabham Straight, honouring Australia's three-time World Champion Jack Brabham, allowed the faster cars to exceed 200 mph (322 km/h). The event's organisation was judged so successful that its promoters were awarded the Formula One Promotional Trophy for 1985. Nelson Piquet, a dual World Champion, summed up the paddock's surprise: "After Detroit, Dallas and Las Vegas, we all expected another bad street circuit." Bernie Ecclestone, head of FOCA, remarked that Adelaide had raised the bar for every circuit seeking a place on the calendar.
The principal complaint from drivers during the weekend was a lack of grip on the newly laid road surface, which caused graining on both qualifying and race tyres. The circuit other than the Brabham Straight had been relaid a few months before the race.
Australian driver and 1980 World Drivers' Champion Alan Jones, driving the Haas Lola team's Lola THL1-Hart, was given the honour of being the first Formula One driver onto the circuit when practice opened on Thursday morning. A section of track — the Rundle Road straight between turns 9 and 10 — was renamed the Jones Straight in his honour.
Qualifying resolved into a three-way contest between the Williams-Hondas of Keke Rosberg and Nigel Mansell and the Lotus-Renault of Ayrton Senna. Rosberg led Friday qualifying with a 1:22.402, only 0.001 seconds ahead of Senna, with Mansell third. In final qualifying Mansell appeared to have secured pole with a 1:20.537, but Senna, on his third run with minutes remaining, set a 1:19.843 in his black-and-gold Lotus 97T powered by a special Renault qualifying engine reputedly producing around 1,150 bhp — seven-tenths faster than Mansell — to take his seventh pole position of the season. Senna was the only driver to lap the circuit in under 1:20.
Alain Prost, already assured of the Drivers' Championship, qualified fourth in his McLaren TAG-Porsche. Michele Alboreto (Ferrari) and Marc Surer (Brabham-BMW) completed the top six. Outgoing World Champion Niki Lauda qualified 16th; Alan Jones 19th after engine and turbo difficulties. All 25 cars present qualified for the race, as the RAM and Zakspeed teams did not travel to Australia.
Run in 35 °C (95 °F) heat, the race was marked by extremely high attrition: only eight cars were classified as finishers. Rosberg was the only front-running driver to complete the distance strongly. He faced technical problems during the race, but acted on a strategy proposed by his race engineer Frank Dernie to minimise time loss; he subsequently presented the winner's trophy to Dernie.
Ayrton Senna led early but eventually retired. On the penultimate lap, Ligier-Renault driver Philippe Streiff attempted to overtake his teammate Jacques Laffite for second place, and the manoeuvre severely damaged Streiff's front wheel axle. With fourth-placed Ivan Capelli (Tyrrell-Renault) already a lap down, Streiff managed to limp his Ligier JS25 to the flag with the front-left wheel bouncing but still attached, retaining third place. It was a career-best result and the only podium of Streiff's career. Ligier team boss Guy Ligier, displeased that Streiff had endangered both cars in a situation where a double podium was assured, declined to offer him a drive for 1986.
Stefan Johansson finished fifth for Ferrari ahead of Gerhard Berger in his Arrows-BMW. Berger had also competed in the Group A support race driving a BMW 635 CSi — technically a breach of Formula One's rule prohibiting drivers from contesting another race within 24 hours of a Grand Prix start. He obtained permission from FISA, FOCA, and his Arrows boss Jackie Oliver, though his touring car race ended after three laps when a Holden Dealer Team Commodore driven by John Harvey forced him into the gravel. The only remaining classified finishers were Huub Rothengatter (Osella) and Pierluigi Martini (Minardi), both four laps behind Rosberg.
Renault competed in their last Grand Prix as a factory constructor until 2002. Patrick Tambay and Derek Warwick both retired with transmission failure. Warwick was fined by FISA after driving a sprint car at Speedway Park on Saturday night — within 24 hours of the race — without the required permission.
Elio de Angelis was disqualified early in the race for returning to his original grid position after being delayed on the parade lap; he later admitted he had simply forgotten the rules.
The race was the 100th World Championship start for Alan Jones, who retired on lap 21 with electrical failure after stalling at the start and fighting back to sixth. Alain Prost retired on lap 27 with engine failure. Niki Lauda — in his final Grand Prix — was running at the front when a brake failure at the end of the Brabham Straight sent his McLaren into the barriers, ending his career while he was in the lead of a race.
The 1985 Australian Grand Prix was a race of institutional farewells. Both Alfa Romeo and Renault competed in their last Grand Prix as constructors in the turbo era — all four of their cars failed to finish. It was also the final race for the Toleman team under its original name; purchased by the Benetton Group, it would be rebranded as Benetton for 1986. Toleman's two Hart-powered cars also failed to finish.
McLaren-TAG Porsche clinched the Constructors' Championship as no Ferrari won the race; Ferrari had entered the finale on 80 points needing McLaren (on 90) to fall short.
In Adelaide's northern industrial suburb of Wingfield, a group of connected streets was named after the 1985 pole-sitter and the six drivers who scored World Championship points: Senna, Rosberg, Laffite, Streiff, Capelli, Johansson, and Berger Roads.