For 1996, Schumacher joined Ferrari, a team which had last won the Drivers' Championship with Jody Scheckter in 1979. He left Benetton a year before his contract with them expired; he later cited the team's damaging actions in 1994 as his reason for opting out of his deal. A year later, technical director Ross Brawn and designer Rory Byrne also departed Benetton to join Schumacher at Ferrari.

Ferrari had previously come close to the championship in 1982 and 1990. The team had suffered a disastrous downturn in the early 1990’s, partially as their famous V12 engine was no longer competitive against the smaller, lighter and more fuel efficient V10s of their competitors. Various drivers, notably Alain Prost, had given the vehicles labels such as "truck", "pig", and "accident waiting to happen". The poor performance of the Ferrari pit crews was considered a running joke. At the end of 1995, though the team had improved into a solid competitor, it was still considered inferior to front-running teams such as Benetton and Williams. Schumacher declared the Ferrari 412T good enough to win the championship.

Schumacher, Ross Brawn, Rory Byrne, and Jean Todt (hired in 1993), have been credited as turning this once struggling team into the most successful team in Formula One history. Three-time World Champion Jackie Stewart believes the transformation of the Ferrari team was Schumacher's greatest feat. Eddie Irvine also joined the team, moving from Jordan.