The first Hungarian Grand Prix was held in 1936 over a 3.1-mile (5.0 km) track laid out in Nepliqet, a park in Budapest. However, politics and the ensuing war meant the end of Grand Prix motor racing in the country for fifty years.

At the start of the 1980s there was a general wish for a Grand Prix to be held behind the Iron Curtain and negotiations took place with the Soviet Union with a view to a race being held in Moscow. In the summer of 1983 however, the attention of the Formula One decision makers turned away from Moscow and towards Budapest in Hungary, whose national sporting authority was keen to put the country back on the map of global motorsport.

At first a street race through Budapest was suggested, but in the end the decision was taken to build a brand new circuit in a valley 19 kilometres outside Budapest. The valley provided natural vantage points for spectators and in 1985 work began on the Hungaroring. The track opened in 1986 and it held its first Formula One event in August that year.The first Grand Prix saw 200,000 people spectating, although tickets were expensive at the time. Today, the support is still very enthusiastic, particularly from Finns.

Due to the nature of the track, narrow, twisty and often dusty because of under-use, the Hungarian Grand Prix is associated with processional races, with sometimes many cars following one another, unable to pass. The secret to a winning performance at Hungaroring, as well as qualifying well, is pit strategy. Passing is a rarity here, although the 1989 race saw a famously bullish performance from Nigel Mansell in the Ferrari, who started from 12th on the grid and passed car after car, finally taking the lead in splendid opportunist style when Ayrton Senna was baulked by a slower runner. The circuit was modified slightly in 2003 in an attempt to allow more passing.

Other notable occasions in Budapest include first Grand Prix wins for Damon Hill's in 1993, Fernando Alonso (in 2003), the first Grand Prix winner from Spain, who also became the youngest ever driver to win a GP, Jenson in an incident-packed race in 2006, and Heikki Kovalainen in 2008. Also noteworthy is Damon Hill's stunning near win in the  unfancied Arrows-Yamaha in 1997, when his car lost drive on the last lap causing him to coast in second place. 

In 2001, Michael Schumacher equalled Alain Prost's then record 51 Grand Prix wins at the Hungaroring, in the drive which also secured his 4th World Title.

The 2006 Grand Prix was the first to be held here in wet conditions. It also saw Mansell's seventeen-year-old record of winning from 12th broken, as Button took his victory from 14th place on the grid.

At the 2008 Hungarian Grand Prix, it was confirmed that Hungary will continue to host a Formula 1 race until 2016.