A defining controversy of the season involved Ferrari and McLaren. McLaren were excluded from the Constructors' Championship after being found guilty of theft and illegal use of confidential Ferrari technical information. As a result, Ferrari clinched the Constructors' Championship at the Belgian Grand Prix. Defending double Constructors' Champions Renault were uncompetitive with their R27 car, finishing third in the constructors' standings after McLaren's exclusion, and went winless for the first time since the 2002 season. Renault's sole podium came when Heikki Kovalainen finished second at the rain-affected Japanese Grand Prix. Following a qualifying incident at the Hungarian Grand Prix in which Fernando Alonso prevented Lewis Hamilton from completing his final flying lap, Alonso was demoted to sixth on the grid and McLaren was made ineligible for constructors' points for that race.
All teams competed with tyres supplied by Bridgestone, which became the sole tyre supplier after Michelin's withdrawal at the end of 2006. All engines ran the mandated 2.4-litre V8 configuration; for the first time since 1962, no Cosworth-powered cars competed, after Cosworth temporarily withdrew from the sport when Williams switched to Toyota engines and Spyker opted for Ferrari engines.
Fernando Alonso switched to McLaren after five years at Renault. Following the retirement of Michael Schumacher and Jacques Villeneuve, Alonso was the only driver on the grid who had previously won a drivers' championship. Juan Pablo Montoya, a McLaren driver until the 2006 United States Grand Prix, moved to the NASCAR Cup Series, ending his Formula One career. Williams replaced Mark Webber with Alexander Wurz; Red Bull Racing signed Webber, displacing Christian Klien. BMW Sauber terminated Jacques Villeneuve's contract, replacing him with Robert Kubica, who was later confirmed for 2007 alongside Sebastian Vettel as test driver. Renault confirmed Heikki Kovalainen as Alonso's replacement; Ferrari announced Kimi Räikkönen to replace the retiring Michael Schumacher. McLaren confirmed Lewis Hamilton — their junior programme driver who won the GP2 Series that year — as their second driver. Spyker confirmed Adrian Sutil, replacing WTCC-bound Tiago Monteiro.
Mid-season, Spyker dropped Christijan Albers after a failure to pay sponsorship monies. Markus Winkelhock raced at the European Grand Prix; Sakon Yamamoto was confirmed for the remaining seven rounds. Scuderia Toro Rosso replaced Scott Speed with Sebastian Vettel following an alleged altercation between Speed and Team Principal Franz Tost. Williams driver Alexander Wurz retired immediately after the season; Kazuki Nakajima replaced him for the Brazilian Grand Prix.
Three constructors entered free-practice-only drivers: Sebastian Vettel for BMW Sauber at the opening two rounds, Christian Klien for Honda at the British Grand Prix, and Kazuki Nakajima for Williams at five Grands Prix.
MF1 Racing was sold to a Dutch-Arab consortium owned by Michiel Mol and renamed Spyker MF1 Team, retaining the MF1 designation for the rest of 2006 under Concorde Agreement rules, then rebranded Spyker F1 from 2007. Spyker's engine supplier became Ferrari. Red Bull Racing officially received an Austrian constructor licence while continuing to operate from Britain. Williams changed engines from Cosworth to Toyota in a three-year deal. ING replaced Mild Seven as Renault's main sponsor; AT&T became Williams' new main sponsor; Etihad Airways was announced as Spyker's title sponsor for 2007. Ross Brawn, Ferrari's technical director for ten seasons since 1997, took a sabbatical and later left the team; in 2008 he became Team Principal of Honda. McLaren signed a title sponsorship deal with Vodafone; Ferrari began a deal with Alice, a brand of Telecom Italia.
Honda ran an "Earth livery" on their RA107 car — the first time since 1968 that a team ran sponsor-free for an entire season. Red Bull Racing used Renault engines while Scuderia Toro Rosso used 2006-spec Ferrari engines, marking the first time since 1997 that Renault had supplied more than one team as a fully-fledged manufacturer. With Spyker and Toro Rosso both using Ferrari customer engines, it was the first time Ferrari supplied more than two teams since the 2001 season.
The 2007 season was the seventh and final year in which traction control was permitted; standardised electronic control units mandated from 2008 prohibited teams from using this technology. Bridgestone supplied 14 sets of dry-weather tyres per driver per weekend: four sets for Friday only and ten for the remainder. Both tyre compounds — hard and soft — had to be used at least once per race. From the second round onwards, one groove on the soft compound tyre was painted white for visual identification. Engine development was frozen from the 2006 Japanese Grand Prix and these engines were used through 2007 and 2008. Tobacco advertising promoting smoking products was banned from car liveries. The two Friday practice sessions were extended from 60 to 90 minutes. Teams finishing fifth through eleventh in the previous season's Constructors' Championship were no longer permitted to run a third car on Friday. All cars were fitted with red, blue and yellow LED cockpit lights, and a warning light connected to the FIA data logger was required to face upwards from the survival cell.
For the first time in nearly half a century, no German Grand Prix was held: the circuits hosting the German Grand Prix began alternating, and the Nürburgring retained its European Grand Prix title because an agreement on naming rights could not be reached with the Hockenheim promoter. After twenty years at Suzuka Circuit, the Japanese Grand Prix moved to the rebuilt Fuji Speedway, which had not hosted Formula One since 1977. The Belgian Grand Prix at Spa-Francorchamps returned after a one-year absence. For the first time since 1975, no country hosted more than one Grand Prix.
The season opened at Albert Park in Australia on 18 March. Räikkönen led from start to finish and became the fourth driver to win on their debut for Ferrari; Alonso finished second and debutant Hamilton third. Felipe Massa took his first pole in Malaysia but Alonso won. Massa led the entire race in both Bahrain and Spain, with Hamilton finishing second in both, becoming the first rookie to finish on the podium in more than his first two consecutive outings.
McLaren dominated the Monaco Grand Prix, with Alonso winning from Hamilton; the pair lapped the entire field except Massa. At the Canadian Grand Prix, Hamilton took his maiden win in his sixth race. The race featured four safety car periods, including one triggered when Robert Kubica suffered a massive accident after losing his front wing — his car struck the barrier at a peak deceleration of 75G. Hamilton won the next race at Indianapolis after a side-by-side battle with Alonso. Ferrari took their first one-two of the season in France, with Räikkönen winning from polesitter Massa. In Britain, Hamilton took his third pole but finished third behind Räikkönen and Alonso.
At the European Grand Prix, held at the Nürburgring, Hamilton started tenth after a qualifying crash and aquaplaned off the circuit in a torrential rainstorm before recovering to finish ninth. In Turkey, Massa took a dominant victory with Räikkönen second and Alonso third; Hamilton suffered a tyre failure while third. Alonso won in Italy from Hamilton, with Räikkönen third. Räikkönen won Belgium, Massa and Alonso second and third, clinching the Constructors' Championship for Ferrari. The Japanese Grand Prix at Fuji was marked by treacherous weather and started behind the safety car; Hamilton won from Kovalainen and Räikkönen. In China, Hamilton won pole but was overtaken by Räikkönen on lap 28 then spun entering the pitlane.
The season finale in Brazil marked the first time since 1986 that three drivers could become World Champion at the final round, and the first time since 1950 that the driver in third place before the final race went on to win the championship. Hamilton entered with 107 points, Alonso with 103, and Räikkönen with 100. Hamilton started second but dropped to the back of the pack with a gearbox problem, recovering to seventh. Räikkönen won the race and the championship with 110 points. Hamilton and Alonso both finished with 109 points; each had won four races, but Hamilton's five second-place finishes to Alonso's four gave Hamilton second place in the championship.
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