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The 1966 Monaco Grand Prix marked the first year the World Championship started the 3-liter formula format. There was a large array of changes including new teams. One unfortunate piece of news for the 1966 season was that Coventry Climax, owned by Jaguar, had withdrawn from F1 racing. The company gave its old engines to Bob King's Racing Preparations in Wembley. Though the engines helped privateers engage in racing they also weren't competitive enough against the new engines of the competitors.

Team Lotus convinced Ford to fund the construction of a new engine by Cosworth Engineering. The Ford-Cosworth engine was not ready so Lotus who had hoped to use the BRM H16 engine ended up with last years Coventry Climax. Cooper was sold to Chipstead Motor Group. Honda began work on their V12 engine but it wouldn't be unveiled until late in the season. Bruce McLaren jumped ship from Cooper and started his own team using the Ford Indianapolis V8 engine. Dan Gurney also started his own project and commissioned Weslake Engineering to design a V12 engine for him. Mike Spence joined Richard Attwood at Reg Parnell Racing to replace Innes Ireland. Surtees was driving for Ferrari again and Bandini joined him as well. Jack Brabham promoted Denny Hulme to be his number two driver for his new project. Cooper recruited Ritchie Ginther to help Jochen Rindt.

Lotus was short of engines going into the race so they put Clark into a 1965 car, but Clark was still able to make the Monaco Grand Prix pole position in his older vehicle. Surtees joined Clark in the front row and Stewart and Hill shared the row behind them. Clark ran into gearbox trouble early on in the race so Surtees was able to take an early lead. By lap ten Clark had been able to rejoin the race and make his way back up to eighth place and had hopes of making it back to first. On lap fifteen Surtees retired with a differential failure, Hulme retired with a drive shaft failure as did Brabham with a gearbox problem. With three racers towards the front knocked out Clark found himself back into fifth place behind Stewart, Rindt, Bandini and Hill. Rindt soon after retired with an engine failure and on lap sixty, Clark retired with a broken suspension. Hill ended up joining the other racers in their misfortunes and spun out. Stewart ended up taking the win forty seconds ahead of Bandini and Graham Hill was fortunate enough to finish in third while most of the others weren't able to finish the Monaco Grand Prix.