He signs a three-year contract with Peugeot for an exclusive engine supply starting from 1998. Olivier Panis and Shinji Nakano share driving duties. He is replaced for the following 7 races by Jarno Trulli. Prost Grand Prix starts construction of a new factory in the Paris suburb of St. Quentin en Yvelines.
Work proceeds at record pace.
The team finishes the Championship with a total of 21 points and takes 7th place in the Constructors' Championship. The Prost Peugeot AP01, the first car entirely designed and constructed by Prost Grand Prix, is unveiled. Olivier Panis and Jarno Trulli are the official drivers for the 1998 season. Prost Grand Prix moves into the new factory. The 80 plus staff rapidly increases in the drawing, RD and IT offices, while machinery of the highest technical level is installed.