The 2004 Australian motorcycle Grand Prix was the penultimate round of the 2004 MotoGP Championship. It took place on the weekend of 15–17 October 2004 at the Phillip Island Grand Prix Circuit.

This race was most notable for the last-lap battle between Sete Gibernau and Valentino Rossi for victory, as well as Rossi's subsequent crowning as world champion - clinching his sixth overall world title, fourth premier-class title and third back-to-back MotoGP title as a result.

After fourteen rounds, Valentino Rossi is narrowly leading the hunt with 254 points. Close second is Sete Gibernau with 224 points and further behind is Max Biaggi in third with 188 points. Rossi has the first opportunity to win the 2004 MotoGP world championship if he finishes second or higher to secure the title, regardless of Gibernau's finish. Gibernau in turn need to score six points more than Rossi to keep his title fight alive.

For 2004 the MotoGP Safety Commission advised to make some changes to improve the safety on the circuit. As such, the Government of Victoria and the Australian logistics and supply chain business Linfox, who purchased the circuit in the same year, invested a two million Australian dollars to execute these changes in two months. The changes involved the extension of the pit lane entry and exit, as well as enlarging existing gravel traps so no changes were made to the fast, flowing lay-out of the circuit itself.

Before the start of the race, the now annual Barry Sheene Tribute Ride took place to commemorate the British rider, who had died due to cancer the previous year. Several hundred motorcyclists and some local press were present, as well as Sheene's former teammate Steve Parrish and his then fifteen-year-old son Freddie Sheene as civilian passenger. It was also revealed that Colin Edwards would move from the Telefónica Movistar Honda to the Gauloises Yamaha Team to partner Valentino Rossi for the 2005 season. He will be replacing Carlos Checa who will be going to the Ducati Marlboro Team for next season.

It is Sete Gibernau who fired the first shot on Saturday, taking pole position with a time of 1:30.122. +0.100 seconds behind is Valentino Rossi, who will be starting just behind the Spaniard and in third is Loris Capirossi who is +0.491 seconds behind. The second row of the grid consists out of Colin Edwards in fourth, Makoto Tamada in fifth and Alex Barros in sixth place. Suzuki test rider Gregorio Lavilla replaces the injured Kenny Roberts Jr. who is still recovering from his elbow injuries he sustained after a first-lap collision on the opening lap of the Japanese round. Garry McCoy also replaces Shane Byrne who is still recovering from wrist damage he sustained during a practice highside at the Czech round where he suffered ligament and tendon damage.

All riders take off and do their usual warm-up lap before lining up in their respective grid slots. As the lights go out, Capirossi gets a great start and immediately slingshots past to take the lead going into Doohan Corner (Turn 1). Rossi manages to remain in second whilst Troy Bayliss has a really good start and manages to get up into fourth spot, almost overtaking Gibernau in the process. Gibernau initially gets off the line relatively well but loses out on the front two, opening up a small gap to Rossi and almost losing the position to Bayliss. Barros makes up one position as he gets away, fighting with sixth place Max Biaggi who managed to briefly overtake teammate Tamada before getting swallowed up again in the pack as Tamada exiting the turn on the opening lap. At the entrance of the Southern Loop, Gibernau has practically nullified the gap and even manages to pass Rossi on the outside exiting the turn, snatching second from him. Further back, Colin Edwards is slowly clawing back his way up the field after losing out to both Camel Honda riders initially, going up Tamada's inside and taking sixth position. Entering Stoner Corner (Turn 3), Gibernau has a look up the inside of Capirossi but stays behind for now. As Rossi is blocked by Capirossi, Bayliss then manages to sneak past around the outside and take third. At the Honda Corner (Turn 4), Gibernau makes a lunge up the inside of Capirossi and takes the lead as Rossi tries to go around the outside of Bayliss but gets blocked off and has to stay behind. Further back, Biaggi - who had overtaken Tamada before - also makes a move down Edward's inside to take sixth position. Exiting the hairpin, Gibernau immediately starts to open up a gap to Capirossi as Rossi hounds Bayliss through Siberia (Turn 6) but almost loses fourth himself to Barros behind him at the entry of the fast unnamed Turn 7. At the exit of that turn, Rossi then tries to line up a pass going into Hayshed (Turn 8) but goes too wide and runs off-track, not crashing out by miracle and even manages to get a great run on Bayliss at Lukey Heights (Turn 9) to make a lunge pass at MG (Turn 10) on the home hero as well as Capirossi for third position. Exiting the hairpin, Bayliss looks to be making a move around the outside of teammate Capirossi at the unnamed Turn 11 but thinks better of it and stays behind for now. Gibernau is still way ahead in front as Rossi is also starting to open up a small gap to the fighting pair of the Marlboro Ducati's. Exiting Turn 12, Barros is close behind Bayliss.

On lap two, Barros almost goes side by side with Bayliss at the Gardner Straight but his superior power preventing him from fully doing that, instead the Repsol Honda rider lines himself up on the outside of Bayliss at Doohan Corner to then try and get the inside line at the Southern Loop but gets blocked and has to stay behind. Biaggi meanwhile is now coming under pressure from Edwards at both Doohan Corner and the Southern Loop, the American trying to pass him around the outside. Rossi meanwhile is still opening up his advantage to the Ducati duo. Gibernau's gap back to Rossi was +1.195 seconds in sector one but has increased to +1.222 seconds in sector two. Barros is close at Lukey Heights, then dives down the inside of Bayliss at MG, moving him up to fourth place. Gibernau's gap back to Rossi has decreased slightly to +1.107 in sector three. Also at MG, Marco Melandri tries to take seventh position from Edwards around the outside but fails and has to stay behind at the exit.