The 1963 season began with world champion Graham Hill scoring the first of his five Monaco grands prix successes. He took full advantage when race leader Jim Clark's gears jammed on the 79th lap, allowing Hill to go through and win from team-mate Richie Ginther.
Monaco saw several changes on the grid, with Porsche and Lola no longer competing in Formula One. Dan Gurney, having lost his Porsche drive, teamed up with Jack Brabham in the former champion's own cars. John Surtees moved to Ferrari, where he joined Willy Mairesse, as Phil Hill and Giancarlo Baghetti had both jumped ship for ATS, a new team formed by breakaway Ferrari management.
On a blazing hot day, 15 cars lined up at the start, with Clark - in the new fuel-injected Lotus 25 - on pole just ahead of Graham Hill and Surtees. As the flag dropped, Hill stormed ahead into an early lead, holding off Clark's challenge at the first corner. By the 18th lap, Clark was right on Hill's tail, and after a wheel to wheel tussle in front of the royal box, Clark came out on top and began to pull away from Hill's BRM by more than a second a lap.
Transmission problems forced Gurney's new Brabham to retire on the 26th lap, while Surtees began to cause problems for both BRMs, first getting ahead of Ginther, and then waging a furious battle with Hill. By the 56th lap, there was less than a second between them as they screamed past the pits seemingly joined together. Surtees nosed ahead in the Ferrari, but Hill came back and re-snatched second place on lap 62.
Surtees then began to drop back as his windscreen and goggles became splattered with oil thrown up from Hill's car, and Ginther and Bruce McLaren both overtook him. With nearly 160 miles of the race completed, Clark was comfortably 17 seconds ahead of Hill, until his gearbox locked up and he spun violently, ending his race. "It's all in the game", Clark said. "I really thought I was going to be the winner. But three things are necessary to win a race - the car to do it, the driver with the capability, and good luck. This was my turn to have ill-luck."
Hill took the chequered flag, setting a new lap record in the process - one of five to be broken during the race. It was later revealed that he had driven throughout with his right foot being burnt by the BRM's radiator.
Ginther came in second, followed by McLaren and Surtees, who broke Hill's new lap record himself as he spectacularly tried to snatch third with a flying last lap. It wasn't quite enough, however, and he had to settle for fourth.