The second Women's World Cup was held in Sweden, with the format unchanged from four years earlier. The host nation opened up in Group A with a poor performance against Brazil, losing 1-0, and when they trailed Germany 2-0 in their next game looked to be heading out. However, they rallied to beat the Germans 3-2 and then beat Japan to secure their quarter final place. Germany went through as group winners having thrashed Brazil 6-1, a result which sent their opponents out as Japan, who had earlier beaten Brazil themselves, edged through in third place on goal difference.
Highly fancied Norway opened up Group B with an 8-0 thrashing of Nigeria and went on to win all their games without conceding a goal and scoring a remarkable 17. Debutants England joined them in the last eight by beating both Canada and Nigeria 3-2, with the two outsiders both failing to progress. In Group C, holders the USA let slip a 3-1 lead to draw their first game against China, but both sides won their remaining games to qualify. Denmark, by virtue of a 5-0 thrashing of Australia, went through as the best third placed team.
The quarter finals were for the most part one sided. The USA beat Japan 4-0, Norway eased past Denmark 3-1 and Germany were too strong for England, winning 3-0. In the remaining match, China led for an hour against the hosts Sweden but a dramatic stoppage time goal forced extra-time, and ultimately penalties. Sweden missed their first, but were handed a lifeline when China missed the kick that would have taken them through. However, with a chance to force sudden death, Sweden missed again to end their dreams of a title on home soil.
The USA's defence of their title came to an end in the semi final against Norway, an early goal by the tournament's leading goalscorer Ann Kristin Aarønes separating the sides, and Germany edged past China by the same score thanks to a goal just two minutes from the end of normal time. The Americans eased their disappointment and losing the title by beating China 2-0 for third place.
In the final, Norway and Germany could not be separated for much of the first half, but it was the Norwegians who took control of the match in the space of three minutes just before half time. Hege Riise, after 37 minutes, and Marianne Pettersen after 40 gave them a comfortable 2-0 lead at the break. There was no way back for Germany in the second half and Norway held on, to become the first European side to take the world title.