Fiat had a long history of Grand Prix competition stretching back to the 1906 ACF Grand Prix, in which Felice Nazzaro placed second. Nazzaro's clean sweep of the ACF Grand Prix, the Targa Florio, and the Kaiserpreis in 1907 had made Fiat a force in international racing, but the departure of drivers Vincenzo Lancia and Nazzaro in 1910 and the interruption of World War I left the company without a meaningful Grand Prix programme for over a decade.
Fiat returned to competition at the Indianapolis 500 before designing an entirely new car for the European Grands Prix of 1921 and 1922. The 1922 regulations set a maximum engine displacement of 2 litres and a minimum weight of 650 kg. The car built to meet these rules was the 804.
The 804's engine, designated Type 404, was designed by engineer Giulio Cesare Cappa. Rather than an entirely new design, the 404 was derived from the Type 402 straight-eight that had powered earlier Fiat competition cars; Cappa removed two cylinders and reduced the stroke from 120 mm to 100 mm, producing a displacement of 1,991 cc from dimensions of 65 mm bore by 100 mm stroke. The resulting stroke-to-bore ratio of 1.54 allowed higher engine speeds than predecessors. Cappa incorporated technologies from the Type 403 engine, including finger follower valve actuation, three-valve return springs, and perforated pistons.
Tested on a bench on 14 March 1922, the 404 engine produced 67 hp at 3,000 rpm, rising to 92 hp at 5,000 rpm. With engine power raised to 112 hp for the Italian Grand Prix, the total car weight was 660 kg and top speed was 170 km/h. The gearbox was a new four-speed unit with a central lever, replacing the gearboxes fitted to the earlier 801, 802, and 501SS. The chassis featured longitudinal members arranged parallel to the front suspension springs before following the bodywork to a pointed tail; the exhausts were integrated into a profiled pipe riveted along the left side of the body.
Fiat entered three 804s in the Grand Prix of the Automobile Club of France at Strasbourg on 15 July 1922, driven by Pietro Bordino, Biagio Nazzaro, and his uncle Felice Nazzaro. In heavy rain, Felice took an early lead and was joined by Bordino and Biagio as most competitors retired with technical failures. On the 53rd lap Biagio suffered a broken rear axle on a straight; the car lost a wheel and struck a tree, killing him. On the final lap Bordino suffered a similar axle failure but managed to stop his car safely and did not finish. Felice Nazzaro won by more than an hour from two Bugatti Type 30s.
Despite Biagio's death, Fiat entered three reworked 804s at the Gran Premio d'Italia on 10 September 1922, held on the newly opened Monza circuit. Nazzaro and Bordino were joined by Enrico Giaccone. Fiat's dominance at the ACF Grand Prix had prompted Ballot, Benz, Bianchi, Bugatti, Mercedes, Rolland-Pillain, and Sunbeam to withdraw; Austro-Daimler was also forced out after a practice accident. Only seven cars started. Giaccone's 804 failed to start with a faulty clutch, but Bordino led home Felice Nazzaro for a Fiat one-two.
The 804's double championship success restored Fiat's Grand Prix reputation, but it also triggered internal disagreement. Cappa wanted to develop an entirely new engine architecture for 1923, while senior executive Guido Fornaca preferred to refine the existing approach. Feeling unable to pursue the design direction he believed was necessary, Cappa concentrated on touring cars and left Fiat permanently on 6 February 1924. Engine supervisor Vincenzo Bertarione had already left Fiat at the end of 1922 after a dispute over pay following the Grand Prix victories.
The 804 was replaced for 1923 by the Fiat 805, which was charged with maintaining the company's competitiveness in Grand Prix racing.