The game builds upon the foundation laid by Formula One 06, which had been released for the PlayStation 2 and PlayStation Portable. As a PlayStation 3 title, it introduced substantially improved visuals including real-time reflections, car reflections on wet circuits, and enhanced wet weather effects. It also featured Sixaxis motion controller compatibility.
Dynamic weather and an overhauled artificial intelligence system called "Live Action Racing" were among the headline features. This AI was designed so that applying pressure to opponents would cause them to make small errors — running wide on corners, colliding with other cars, or spinning off the road independently. Conversely, the AI would actively seek overtaking opportunities in a manner intended to mirror real racing behavior.
The game is based on the early stages of the 2006 Formula One World Championship season. As a result of this snapshot approach, certain driver changes that occurred during the actual season are not reflected: Yuji Ide is shown driving for Super Aguri despite losing his FIA Super Licence after only four races, and Pedro de la Rosa, Robert Kubica, Franck Montagny, Sakon Yamamoto, and Robert Doornbos are absent from the roster. The Midland team likewise does not carry the Spyker branding it adopted later in the season.
The Belgian Grand Prix was absent from the race calendar. The game also lacked force feedback support at launch — a notable omission for simulation titles played with steering wheel controllers — though a patch released in early 2008 added this functionality. Support for 1080i and 1080p output resolutions was never added.
Players begin their career by selecting one of three entry-level teams — Toro Rosso, Super Aguri, or Midland F1 — and completing test sessions at either Silverstone, Magny Cours, or Circuit de Catalunya. Performance in these tests determines whether the player earns a role as test driver or race driver. Strong results as a test driver lead to promotion as a second driver at the team, after which the player works through a competitive season with track-position targets to fulfill.
Formula One Championship Edition launched in North America on 27 February 2007, becoming the first Formula One game available in that market since 2003. For the European and Australasian PlayStation 3 launch, it served as a launch title.
The game's release coincided with the announcement that Codemasters had secured exclusive rights to the Formula One license. Because the game was effectively an updated version of Formula One 06 rather than a full new entry, no 2007 edition was produced — marking the first gap in the series since 1996. Sony's F1 game series, which had run for over a decade, came to an end with this title.
The next official F1 game to appear on a Sony platform was F1 2009, developed by Sumo Digital and published by Codemasters for the PlayStation Portable and Wii, which arrived roughly three years after Championship Edition. Codemasters followed that with the fully licensed F1 2010 for PlayStation 3, Xbox 360, and PC in September 2010.
The game received average reviews according to Metacritic. In Japan, Famitsu awarded it 30 out of 40. Positive assessments praised the gameplay, graphics, and car customization options, with 411Mania calling it "high-octane fun" and awarding it eight out of ten. The Sydney Morning Herald gave it three stars out of five and was positive about the graphics and car handling. More critical voices pointed to the prominent driving line — which automatically slowed the car through corners — as undermining the simulation credentials of the title.
Formula One Championship Edition marks the end of an era in officially licensed F1 gaming. Studio Liverpool, which had developed F1 titles for PlayStation since the mid-1990s, did not produce another Formula One game after this release. The Codemasters series that followed would eventually become the definitive licensed F1 game franchise for well over a decade, establishing a template of annual releases covering full seasons that Championship Edition, as a snapshot of the 2006 season, could not match.