Alain Prost had harboured ambitions of team ownership since at least 1992, when he secretly tested the Ligier JS37, wearing Érik Comas's crash helmet to remain incognito, with the aim of becoming a driver-owner. That deal collapsed before the opening race of the season, and Prost instead returned to Williams in 1993 to claim his fourth world championship before retiring.
The Ligier team changed hands twice more before Prost completed its purchase in February 1997, following months of negotiation. Ligier had passed from Cyril Bourlon de Rouvre to Flavio Briatore and Tom Walkinshaw in early 1994, and had most recently won the 1996 Monaco Grand Prix under Olivier Panis before Prost acquired the outfit. The incoming owner immediately renamed it Prost Grand Prix, retained Cesare Fiorio as team principal, and elected to race the Ligier JS45 — redesigned by Loïc Bigois and simply rebadged — while Mugen-Honda engines continued for the opening year.
The debut season offered genuine encouragement. Panis collected podium finishes in Brazil (third) and Spain (second) and stood third in the Drivers' Championship before a high-speed crash in Canada broke both his legs. In his absence, Prost fielded rookies Jarno Trulli and Shinji Nakano. Trulli demonstrated exceptional pace in Austria, leading for much of the race before a mechanical failure denied him a likely podium. His fourth place in Germany and consistent points form persuaded Prost to retain both Trulli and Panis for 1998. 1997 world champion Jacques Villeneuve later acknowledged that Panis had been a genuine threat during the title fight, running closely behind him in several rounds.
Hopes ran high for 1998, when an all-French alliance with Peugeot — supplying full factory works engines — was framed as the foundation of a title challenge. Just before the announcement was formalised, Peugeot revised the commercial terms so that Prost had to pay for the engines over three seasons rather than receive them free of charge over five. With insufficient time to find an alternative supplier without risking sponsor departures, Prost accepted the altered deal.
The season proved a disaster. Serious gearbox problems in pre-season testing nearly prevented the team from reaching the Australian opener, and the campaign yielded a single championship point — Trulli's sixth place at Spa. The 1999 season was marginally better: John Barnard was brought in as technical consultant, and Trulli delivered a strong second place at the Nürburgring. However, the points that seemed within reach routinely failed to materialise, and Trulli exercised a contractual exit to join Jordan, while Panis departed for a McLaren test role.
The 2000 campaign was marked by severe financial pressure. Jean Alesi, Prost's former teammate at Ferrari, joined alongside F3000 champion Nick Heidfeld in what appeared a promising lineup. The team nonetheless finished last in the Constructors' Championship without scoring a single point. Heidfeld was disqualified from the European Grand Prix for his car being underweight; the two drivers collided in Austria; and Prost dismissed designer Alan Jenkins after Monaco. The relationship with Peugeot collapsed entirely.
For 2001 the team ran Acer-badged Ferrari customer engines. Alesi delivered steady but modest results — his best finish came in Canada, where he performed celebratory donuts before throwing his helmet into the crowd. Mid-season tensions led to Alesi walking out after the German Grand Prix, with Heinz-Harald Frentzen taking over. Luciano Burti suffered a terrifying crash in Belgium. The team's debt continued to mount as Gauloises, which had departed as title sponsor at the end of 2000, left a funding gap that could never be filled.
Prost Grand Prix entered administration at the start of 2002, before the new season could begin. A consortium backed by Phoenix Finance purchased the team's assets and sought to enter the 2002 championship, but the FIA classified the bid as a new entry rather than a continuation of Prost's entry, and the project collapsed. Reflecting on the experience, Alain Prost called it the biggest mistake of his life.
The team scored 35 Constructors' Championship points across five seasons. Its greatest legacy was the brief period of optimism in 1997 and 1999 when Prost looked capable of producing a genuine front-running car, and the spectacle of a champion's determination to plant a French name at the top of what was then Formula One's most competitive era.