Mercedes-Benz had withdrawn from all motorsport after the 1955 Le Mans disaster. Fangio moved to Ferrari, which had absorbed the Lancia D50 cars and drivers after that team's financial collapse. Ferrari's lineup included Fangio, Eugenio Castellotti, Luigi Musso, and Peter Collins. Stirling Moss, who had been Fangio's Mercedes teammate in 1955, moved to rival Maserati. The Swiss Grand Prix was removed from the calendar after Switzerland banned motor racing, and Dutch and Spanish rounds were cancelled mid-season due to the Suez Crisis.
Vanwall replaced Ferrari's outgoing Maurice Trintignant with Ken Wharton. BRM introduced their own chassis for the first time since 1951, debuting at the British Grand Prix with Tony Brooks. At the French Grand Prix, Colin Chapman made his sole F1 race entry — for Vanwall — and crashed into his team leader in practice without starting. Bugatti made a one-off appearance with their Type 251 at the same event. Paco Godia joined Maserati from Belgium, and Alfonso de Portago debuted for Ferrari at the French Grand Prix.
The opening Argentine Grand Prix featured just thirteen cars, all Italian. Fangio lost his car to Musso mid-race but took over another teammate's machine after his own fuel pump failed, eventually winning after Moss's engine failed with 15 laps remaining. At Monaco, Moss dominated and Fangio again had difficulties, eventually receiving Collins's car when the Briton sacrificed his second place — a gesture of considerable sportsmanship. Moss won, with Fangio finishing close behind after a recovery drive.
At the Belgian Grand Prix, Fangio set pole more than ten seconds under the lap record. Moss led before losing a rear wheel; Fangio took over until his car stopped at the far end of the circuit with no opportunity for a car swap. Collins won. Fangio recovered form to win the French Grand Prix — although Collins again took victory when Fangio's fuel line split at half-distance, making it two consecutive wins for Collins.
The British Grand Prix at Silverstone saw BRM lead — Hawthorn and Brooks heading the field — before both retired. Fangio won after Moss made two pit stops for oil and engine problems. In Germany, Fangio won comfortably, with Collins forced to pit after fuel fumes entered his cockpit through a leaking line. Going into the Italian Grand Prix at Monza, Collins needed to win the race with Fangio scoring three points or fewer to have any chance at the title.
Collins made a second pit stop for tyres and offered his car to Fangio — a sacrifice of the championship itself — rather than see the team principal lose the title. This gesture of sportsmanship allowed Fangio to chase Moss, who had dominated most of the race. Moss won by six seconds, but Fangio's second place was enough to clinch the championship.
Juan Manuel Fangio finished with 30 points (under the best-five-results rule) and won the title. Stirling Moss finished second with 27 points, Peter Collins third with 25. The season was remarkable for no race being won by a British constructor — a drought that would not be repeated until 2006.
Collins's decision at Monza to hand his Ferrari to Fangio, knowing it likely cost him the World Championship, is one of the most discussed acts of sportsmanship in motorsport history. Collins was only 25 years old and believed he would have future opportunities for the title; he was killed at the German Grand Prix two years later.
Bugatti's sole World Championship appearance at the French Grand Prix with the front-engined Type 251 produced no notable result and marked the final entry by the historic French manufacturer.
The 1956 season confirmed Fangio's position as the most accomplished driver in the championship's history at that point, having now won four titles with four different constructors — a feat unique in the sport. Peter Collins emerged as one of the most promising British talents, and Stirling Moss's dominance for Maserati across several rounds indicated that the British challenge to Italian supremacy would only intensify. The cancellation of three rounds due to the Suez Crisis reflected how closely tied the sporting calendar remained to geopolitical events.