The Luxembourg name was adopted in 1997 as a practical solution to a scheduling problem: the Hockenheimring was already contracted to host the German Grand Prix that year, leaving the Nurburgring without a conventional title. The Nurburgring had previously hosted the European Grand Prix in 1995 and 1996, but that name had also been reassigned for 1997. When the Portuguese Grand Prix was cancelled, a second race in Spain was added, with Jerez hosting the European Grand Prix alongside the Spanish Grand Prix at Barcelona. Jerez was intended to hold the European Grand Prix again in 1998, but the organisers lost the rights to the name after an incident on the podium at the 1997 running of that race. The Nurburgring continued to host a race as the Luxembourg Grand Prix in 1998, then reverted to the European Grand Prix title in 1999, keeping that name every year until 2007.
The 1997 Luxembourg Grand Prix produced a historically notable result: Renault-powered cars occupied the top four finishing positions. Jacques Villeneuve, driving for Williams-Renault, claimed victory, a result that proved to be his final Formula One win. For much of the race Mika Hakkinen appeared set to take his first Formula One victory, having pulled clear of his McLaren teammate David Coulthard at the front of the field. Within a single lap, however, both McLarens retired with blown engines, handing Villeneuve the lead and a result that moved him significantly closer to the Drivers' Championship.
The race was also marked by a damaging first-corner incident. Ralf Schumacher collided with his Tyrrell teammate Giancarlo Fisichella at the opening corner, immediately eliminating Ralf Schumacher, Fisichella, and Ukyo Katayama. The incident also inflicted suspension damage on Michael Schumacher's Ferrari, which continued briefly before retiring two laps after the collision, ending a difficult afternoon for the reigning champion.
The 1998 running of the Luxembourg Grand Prix provided Mika Hakkinen with the result denied to him twelve months earlier. Hakkinen won the race outright, with Michael Schumacher finishing second despite having qualified from pole position. David Coulthard completed the podium in third. The victory was significant beyond the result itself: just as Villeneuve had won the championship in the same season he won the 1997 Luxembourg Grand Prix, Hakkinen went on to clinch the Drivers' title at the final race of the year in Suzuka. Every winner of the Luxembourg Grand Prix therefore became World Champion in the same season.
The Luxembourg Grand Prix existed only as a name of convenience, a product of the scheduling constraints that shaped the Formula One calendar in the late 1990s. Despite its brief two-race history, it witnessed two moments of significance: Villeneuve's last Formula One victory and Hakkinen's first win at that venue, the latter part of his maiden championship campaign. The Nurburgring continued to host Formula One races for years afterwards under different titles, but the Luxembourg Grand Prix name was never revived.