This was the 3rd season with the expanded Group Stage. To accommodate the extra matches only 23 domestic champions of the UEFA member associations participated in the 1996–97 UEFA Champions League. As current UEFA Champions League titleholder, Juventus automatically qualify for this season's competition. As they were not Serie A 1995-96 champions, Italy had 2 representatives this season.
The 16 lower tier domestic champions played a home and away knockout round. With the admission of Juventus required the Russia champions to play in the Qualifying Round. The champions of Czech Republic returned after being absent in 1995-96. Juventus and Slavia Prague replaced the champions of Croatia and Cyprus that participated in the 1995-96 competition.
|New teams|| Teams in |
| Teams eliminated |
|Qualifying Round||16 new teams||>>> 8 teams|
|Group Stage|| 8 Qualifying winners |
8 new teams
>>> 8 teams
The 8 winners from the Qualifying Round joined with the 8 higher tier domestic champions to form 4 groups of 4 teams, playing a home and away series.
The top 2 teams from each group advanced to the knockout stage.
|Group A||Group B||Group C||Group D|
|2||Ajax||Borussia Dortmund||Manchester United||Rosenborg|
|3||Grasshoppers||Widzew Łódź||Fenerbahçe||AC Milan|
|4||Rangers||Steaua Bucureşti||Rapid Wien||Göteborg|