1996 - 1999

Schumacher finished third in the Drivers' Championship in 1996, and helped Ferrari to second place in the constructors' championship ahead of his old team Benetton. He won three races, more than the team's total tally for the period from 1991 to 1995.

During the initial part of the 1996 season, the car had had reliability trouble and Schumacher did not finish 6 of the 16 races. He took his first win for Ferrari at the Spanish Grand Prix, where he lapped the entire field up to third place in the wet. In the French Grand Prix Schumacher qualified in pole position, but suffered engine failure on the race's formation lap. However at Spa-Francorchamps, Schumacher used well-timed pit-stops to fend off the Williams' Jacques Villeneuve. Following that, at Monza, Schumacher won in front of the tifosi. Schumacher's ability, combined with the improving reliability of Ferrari, enabled him to end the season, putting up a challenge to eventual race and championship winner Damon Hill at Suzuka.

Michael Schumacher and Jacques Villeneuve vied for the title in 1997. Villeneuve, driving the superior Williams FW19, led the championship in the early part of the season.However, by mid-season, Schumacher had taken the Championship lead, winning five races,

and entered the season's final Grand Prix with a one-point advantage. Towards the end of the race, held at Jerez, Schumacher's Ferrari developed a coolant leak and loss of performance indicating he may not finish the race. As Villeneuve approached to pass his rival, Schumacher attempted to provoke an accident but got the short end of the stick, retiring from the race. Villeneuve went on and scored four points to take the championship. Schumacher was punished for unsportsmanlike conduct for the collision and was disqualified from the Drivers' Championship.

In 1998, Finnish driver Mika Häkkinen became Schumacher's main title competition. Häkkinen won the first two races of the season, gaining a 16 point advantage over Schumacher.

Schumacher then won in Argentina and, with the Ferrari improving significantly in the second half of the season, Schumacher took six victories and had five other podium finishes. Ferrari took a 1–2 finish at the French Grand Prix, the first Ferrari 1–2 finish since 1990, and the Italian Grand Prix, which tied Schumacher with Häkkinen for the lead of the Drivers' Championship with 80 points, but Häkkinen won the Championship by winning the final two races. There were two controversies;

at the British Grand Prix Schumacher was leading on the last lap when he turned into the pit lane, crossed the start finish line and stopped for a ten second stop go penalty. There was some doubt whether this counted as serving the penalty, but, because he had crossed the finish line when he came into the pit lane, the win was valid. At Spa, Schumacher was leading the race by 40 seconds in heavy spray, but collided with David Coulthard's McLaren when the Scot, a lap down, slowed in very poor visibility to let Schumacher past. After both cars returned to the pits, Schumacher leaped out of his car and headed to McLaren's garage in an infuriated manner and accused Coulthard of trying to kill him.

Rumours circulated that Coulthard may be replaced by Schumacher for the 1999 season and beyond and, in a previous edition of the F1 Racing magazine, Ron Dennis revealed that he had approached Schumacher to sign a deal with McLaren. However, peripheral financial issues that tied Schumacher with Ferrari, such as sponsorship agreements and payment, could not be rectified in a move to the rival team and so, no deal came to fruition.

Schumacher's efforts helped Ferrari win the Constructors title in 1999. He lost his chance to win the Drivers' Championship at the British Grand Prix at the high-speed Stowe Corner, his car's rear brake failed, sending him off the track and resulting in a broken leg. During his 98 day absence, he was replaced by Finnish driver Mika Salo. After missing six races, he made his return at the inaugural Malaysian Grand Prix, qualifying in the pole position by almost a second.

He then assumed the role of second driver, assisting team mate Eddie Irvine's bid to win the Drivers' Championship for Ferrari.In the last race of the season, the Japanese Grand Prix, Häkkinen won his second consecutive title. Schumacher would later say that Häkkinen was the opponent he respected the most.