An NOC may enter up to one men's team with 12 players and up to one women's team with 12 players. Automatic qualifications were granted to the host country for both events plus the gold and silver medal winners from the previous Olympic Games in the men's tournament, and the champion at the 1983 FIBA World Championship in the women's tournament. Additional spots for the men's tournament were decided via the continental championships held by FIBA, while the remaining slots for the women's competition were assigned to the top six teams in a tournament held in Havana, Cuba months before the Olympic Games.
The top four places in each of the preliminary round groups advanced to the eight team, single-elimination knockout stage, where Group A teams would meet Group B teams. Both the host nation's team United States and then Olympic Champions Yugoslavia advanced undefeated to the second stage. The only teams representing Asia and Africa, China and Egypt respectively couldn't advance and ended up competing for eighth place with Brazil and France.
The first two places in the preliminary group compete for the gold medal, while the third and fourth places compete for the bronze. The remaining teams' group ranking determines their positions in the final standings. With the withdrawal of the Soviet Union's women's team, a new Olympic champion was to be crowned in Los Angeles. The host nation's team went through the first round undefeated and won their first gold medal in women's basketball history against South Korea, one of the teams invited to replace the Soviet Union and Hungary. China, the other Asian representative, earned a bronze medal by defeating Canada. Yugoslavia's team couldn't repeat their bronze medal performance from the previous tournament and finished at the bottom of the rankings.