The immediate cause of the 1906 formula was the ACF's frustration with the Gordon Bennett Cup's three-car-per-country limit. France had the largest automobile industry in Europe, yet its manufacturers competed on the same numerical footing as countries with a single entrant. After Léon Théry won the 1905 Gordon Bennett race for France, giving the ACF the right to host the next event, the club chose to replace the national format with a race open to any number of entries from any country, focused on manufacturers rather than national clubs.
The resulting formula placed no limit on entries by country. Instead, it imposed a maximum weight of 1,000 kilograms per car excluding tools, upholstery, wings, lights, and fittings, with an additional 7 kilograms permitted for a magneto or dynamo. A fuel consumption limit of 30 litres per 100 kilometres was applied. Engines were unrestricted in size, leading to displacements ranging from 7,433 cc for the Grégoire to 18,279 cc for the Panhard. All entries used four-cylinder engines; only the driver and riding mechanic were permitted to work on the car during the race.
The circuit near Le Mans was roughly triangular, running 103.18 kilometres per lap through farmlands and forests on compacted dust roads sealed with tar. Competitors lapped it twelve times over two days — six laps each day — for a total distance of 1,238 kilometres. The ACF erected 65 kilometres of palisade fencing around the circuit and built several footbridges over the track, addressing the safety failures that had caused the Paris–Madrid road race to be stopped at Bordeaux in 1903.
Thirty-four cars started from ten French manufacturers, two Italian teams (FIAT and Itala), and one German entry (Mercedes). Hot conditions melted the road tar during the race, which was kicked up into drivers' faces past their goggles. Punctures were frequent. Tyre supplier Michelin introduced a detachable rim with a tyre pre-fitted that could be swapped onto a car after a puncture in under four minutes, compared to fifteen minutes for conventional tyre changes. This innovation proved decisive.
Hungarian-born Renault driver Ferenc Szisz led from lap three of the first day and won with a combined time of 12 hours, 12 minutes, and 7 seconds, at a top speed of 154 kilometres per hour. Felice Nazzaro of FIAT finished second, 32 minutes behind; Albert Clément of Clément-Bayard was third.
Beyond the Michelin detachable rim, the 1906 race produced several procedural innovations that shaped subsequent Grand Prix organisation. Starting order was determined by draw, with cars dispatched at 90-second intervals. The time each car recorded on day one determined its starting time on day two, ensuring that positions on the road directly reflected race standings — an equivalent of today's reverse-order format applied to multi-day endurance racing. Cars were held overnight in parc fermé, preventing teams from working on them between sessions.
Exhaust pipes were directed upwards on all cars to reduce dust thrown onto the road surface — an early acknowledgement of the relationship between car specification and race environment.
Although critics noted that the race had been too long and that the staggered start made driver-to-driver competition hard to follow, the ACF declared the format a success and ran the Grand Prix again in 1907. The conference held in 1904 during the Gordon Bennett dispute had produced the AIACR, the forerunner of the FIA, and the 1906 race cemented that body's role in regulating international events. Until the First World War the ACF Grand Prix was the only annual race consistently called a Grand Prix, and it is commonly recognised as the founding event of Grand Prix motor racing.