|Host country Portugal|
Champions Norway (2nd title)
Third place China PR
|Teams 8 (from 2 confederations)|
The 1996 Algarve Cup was the third edition of the Algarve Cup, an invitational women's association football tournament. It took place between 11 and 17 March 1996 in Portugal with Norway winning the event for the second time in its history, defeating Sweden, 4-0 in the final-game.
China, Iceland and Russia were all invited to appear in the Algarve Cup for the first time replacing Italy, the Netherlands and the United States. China became the first team to compete in the tournament representing the Asian Football Confederation.
The eight invited teams were split into two groups that played a round-robin tournament. On completion of this, the fourth placed teams in each group would play each other to determine seventh and eighth place, the third placed teams in each group would play each other to decide fifth and sixth place, the second placed teams in each group would play to determine third and fourth place and the winners of each group would compete for first and second place overall.
Points awarded in the group stage followed the standard formula of three points for a win, one point for a draw and zero points for a loss.
Portugal finished bottom of their group for the third year in a row but defeated Finland 3–0 to finish seventh in the final overall standings.
Russia and Iceland faced each other in the fifth place deciding match and with the score level after normal time and an added period of sudden death extra-time, contested the outcome with a penalty shootout. Russia won this 3–2.
China reached the third place play-off in their first appearance at the Algarve Cup and defeated Denmark to take the bronze medal.
An all Scandinavian final saw 1995 FIFA Women's World Cup winners Norway beat Sweden 4–0 and become champions for the second time in the competition's history.