Both teams progressed through four knock-out rounds to reach the final. The match was Falkirk's fourth appearance in the Scottish Challenge Cup Final with the club defending an unbeaten record in the final having won on three previous occasions, the most recent in 2004. It was also Hamilton's fourth appearance, the club winning twice in successive years in the early-1990s and losing in 2005. The tournament was contested by clubs below the Scottish Premier League with both clubs from the First Division. The match was watched by 5,210 spectators as well as being broadcast live on BBC Alba.
An early goal from Darren Dods in the 2nd minute was enough for Falkirk to win the match 1–0. In doing so Falkirk became the first club to win the tournament for a fourth time.
The competition is a knock-out tournament and in 2011–12 was contested by 32 teams: the 30 clubs that played in the First, Second and Third Divisions of the Scottish Football League and two Highland Football League clubs by invitation. For the first round only, the draw was divided into two geographical regions made up of 16 clubs – north/east and south/west. Teams were paired at random and the winner of each match progressed to the next round and the loser was eliminated.
The reward for reaching the quarter-final stage was an away game against East Fife of the Second Division. The Methil based club took the lead on the 27th minute courtesy of a right-foot curler from Ryan Wallace. However, two goals in quick succession from Kallum Higginbotham and Craig Sibbald to make the score 3–1 was enough to overcome East Fife, with Higginbotham sealing the scoreline at 4–1 on the 87th minute in the match at Bayview Stadium.
The semi-final draw paired Falkirk with high flying Annan Athletic of the Third Division. Annan Athletic had played 12 games and won 10 in all competitions leading up to the semi-final tie and had knocked out First Division club Ayr United in the previous round. However, three first half goals, one from Mark Millar and two from Farid El Alagui saw off Annan Athletic in front of a record official attendance of 1,575 at Galabank.
The quarter-final draw paired Hamilton Academical with another First Division side, Greenock Morton, whom Accies defeated in the 1992 Final. Despite Greenock Morton taking the lead in the 10th minute from a Paul Di Giacomo goal, Hamilton scored two other first half goals from Greig Spence and Simon Mensing to win 2–1 at New Douglas Park to progress to the semi-final stage.
A third club from the First Division provided the opposition for Hamilton in the semi-final in the form of Livingston. A late first half goal in the 43rd minute from Mark McLaughlin was enough to knock out the West Lothian side in front of a crowd of 1,418 and progress to their fourth Scottish Challenge Cup Final in the club's history.
The 2012 final marked the first time the event was hosted at Almondvale Stadium in Livingston, the home of Livingston F.C.. The venue opened in 1995 and at the time of the final was officially known as the Braidwood Motor Company Stadium after its sponsor. Seating arrangements for spectators in the stadium were segregated with Falkirk supporters occupying the East Stand and parts of the North and South Stands whilst Hamilton fans were allocated tickets for the West (Main) Stand. Falkirk travelled around 20 miles (32.2 km) to the venue and Hamilton Academical travelled approximately 30 miles (48.3 km).
With the inclusion of two Highland League clubs for the first time, this brought the number of teams competing up to 32 which meant that there was no random bye for any club into the second round so both Falkirk and Hamilton entered the first round. Falkirk eliminated three lower league clubs en route to the final whilst Hamilton eliminated only one; defeating three First Division teams before the final.
Both teams appeared in the final for the fourth time. Falkirk had won the tournament on their three previous final appearances in 1993, 1997 and 2004, whereas Hamilton Academical had won the tournament twice in successive years in 1991 and 1992 and came runner-up in 2005.