Heading into the race, Schumacher led the Drivers' Championship with 56 points, ahead of Coulthard on 44 and Häkkinen on 38. Ferrari also led the Constructors' Championship by six points over McLaren. The 4.326 km A1-Ring was hosting the Austrian Grand Prix for the fourth time since it had been alternated back onto the calendar. Bridgestone supplied Soft and Medium dry compound tyres for the event. Minimal safety upgrades were made beforehand: new kerbs were installed across the track with flagstones to prevent dust gathering on the circuit, and an additional row of tyres was placed at each corner to increase absorption in the event of a collision. Eddie Irvine withdrew from the event after the second Friday practice session, having been diagnosed at the infield medical centre with suspected appendicitis and abdominal pain from an enlarged intestine. On the advice of FIA medical delegate Sid Watkins, he left for London for surgical consultation and was replaced for the remainder of the event by Jaguar test driver Luciano Burti.
Häkkinen took his fourth pole position of the 2000 season and the 25th of his career, with a lap of 1:10.410, his first pole since the San Marino Grand Prix more than three months earlier. He set the time using parts of his teammate's setup. Coulthard joined him on the front row, three tenths of a second slower, having lost time on his penultimate run after clipping a kerb at Castrol Kurve. Barrichello qualified third, briefly holding provisional pole on new tyres before the McLarens set their final times. Schumacher qualified fourth, six tenths behind Häkkinen, his session troubled by uneven handling throughout and a high-speed spin at the second corner. Jarno Trulli qualified fifth for Jordan. Ricardo Zonta and Jacques Villeneuve took sixth and seventh for BAR with their new aerodynamic packages, both spinning during their runs. Jenson Button qualified 18th using the spare Williams, set up for Ralf Schumacher, after his own car suffered an engine failure during the session.
The race commenced before 85,112 spectators in cool, overcast conditions. At the start, Häkkinen held the lead into the first corner. Further back, a series of collisions swept through the field on the opening lap. Zonta out-braked himself and struck the rear of Schumacher's Ferrari, sending it into a 180-degree spin and stopping it on the kerbs beside the outside grass. Trulli collided with the rear of Barrichello's Ferrari, which had been sent onto the gravel after reportedly being instructed to yield to Schumacher heading into turn two; Trulli then also struck Schumacher's right-front suspension. Simultaneously, Pedro Diniz swerved to avoid Verstappen ahead of him, veered across the track, and struck Fisichella's car at around 200 km/h, sending Fisichella into the barrier. Ralf Schumacher spun near the stationary cars but restarted and drove away. Race director Charlie Whiting deployed the safety car rather than stopping the race. The safety car was withdrawn at the end of lap two with Häkkinen leading.
Once racing resumed, Häkkinen and Coulthard pulled clear and exchanged fastest laps. Pedro de la Rosa ran as high as third for Arrows before retiring from that position on lap 33 with a gearbox oil leak. Heinz-Harald Frentzen retired from the race on lap five when his Jordan suffered engine failure, spinning off on oil dripping from his own car. Diniz and Zonta were each given ten-second stop-go penalties on lap 16 for their roles in the first-lap incidents, following a review of television footage.
By lap 30, Häkkinen held a 15.2-second advantage over Coulthard. McLaren displayed pit boards instructing both drivers to reduce their engine revolutions to preserve their cars. Häkkinen made his sole scheduled pit stop on lap 38, rejoining in second position behind Coulthard. When Coulthard stopped on lap 42, Häkkinen retook the lead and held it to the finish, completing the 71-lap race in a time of 1:28:15.818 at an average speed of 208.792 km/h, winning by 12.5 seconds. Coulthard was second with Barrichello third, the latter hampered throughout by a damaged right-rear diffuser sustained in contact with Trulli on the first lap. Villeneuve came fourth, Button fifth, and Mika Salo sixth for Sauber.
A routine post-race inspection found a missing paper seal on the electronic control box of Häkkinen's car. Technical delegate Jo Bauer's discovery prompted the FIA to impound and analyse the unit. On 25 July the FIA concluded that Häkkinen had gained no competitive advantage from the missing seal and his victory was allowed to stand. McLaren, however, was deducted ten constructors' championship points and fined $50,000 for violating Article 7 of the 2000 Formula One Sporting Regulations. McLaren did not appeal. Mercedes-Benz vice-president of motorsport Norbert Haug criticised the decision, stating his belief that the seal had never been applied to the car.
The championship consequences of the race were significant. Schumacher's first-lap retirement reduced his lead in the Drivers' Championship to six points, with Coulthard on 50 points, Häkkinen on 48, and Barrichello on 40. In the Constructors' Championship, Ferrari maintained their lead with 92 points; McLaren's penalty kept them second with 88 points, while Williams moved to third on 19 points with seven rounds remaining.
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