The twelve teams are divided into three groups that played a round-robin group stage, followed by one position play-off match for every team.
With 12 teams participating, the Algarve Cup format has been as follows: Groups A and B, containing the strongest ranked teams, are the only ones in contention to win the title. The group A and B winners contest the final - to win the Algarve Cup. The runners-up play for third place, and those that finish third in the groups play for fifth place. The teams in Group C played for places 7–12. The winner of Group C played the team that finished fourth in Group A or B (whichever has the better record) for seventh place. The Group C runner-up played the team who finishes last in Group A or B (with the worse record) for ninth place. The third and fourth placed teams in Group C played for the eleventh place.
Points awarded in the group stage followed the standard formula of three points for a win, one point for a draw and zero point for a loss. In the case of two teams being tied in a group, their head-to-head result determined their place in the group.
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