Alonso, whose McLaren-Honda has been completely uncompetitive in the 2017 season so far this year, qualified in fifth last weekend for today's race, sandwiched between former F1 driver Tauma Sato and 2011 Indy 500 runner-up JR Hildebrand.
Scott Dixon took pole position ahead of Ed Carpenter while defending Indy 500 champion Alexander Rossi completes the three-man front row.
The 33 starters are set to race around the 2.5-mile circuit 200 times to complete the 500-mile race in Indianapolis which starts at 12.19pm local time (5.19pm BST) and is expected to last around three hours.
Keep up with all the latest updates from the race right here.
Indy 500 2017 line-up: How the starting grid and drivers will look Thu, May 25, 2017
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Indy 500 latest updates
Lap 179: FERNANDO ALONSO IS OUT OF THE INDY 500!
Lap 175: Thrilling racing. Chilton is battling hard to hang onto the lead but he doesn't have to deal with Castroneves yet.
He is too busy holding onto third with Sato all over his backside.
Alonso meanwhile is up to seventh and making some exceptionally gutsy passes on the outside.
Lap 171: That caution has worked out very well for Chilton and he is back in the lead as we get ready for green flag racing.
Every car will be trying to go to the end after going in to refuel under caution. Alonso is ninth and victory looks unlikely from here for him but Chilton is in with a shout.
Three-time winner Helio Castroneves is up there too.
Lap 168: Chilton has indeed pitted and if he can go 33 laps on the one tank, he might actually win this thing.
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Meanwhile, we're under caution again because Zach Veach's engine has failed.
Lap 162: The strategies here are starting to pan out – Max Chilton is up front and has been leading for a while.
He's unlikely to do so for long though as he will have to pit soon.
Alonso meanwhile is working with Sato to try to move up from 10th.
Lap 142: We were, very briefly, racing there. But the caution period was not without incident.
Rossi came into the pits but drove off with part of the refuelling hose still attached. He's lost a lot of time and is at the back of the field.
Ed Carpenter has suffered major front wing damage which brings the caution back about 20 seconds after we restarted.
In that 20 seconds though, Alonso lost quite a number of places. Plenty haven't pitted but once that all shakes down, the two-time F1 champion will be fourth by my count.
Lap 137: Alonso gets to take the rolling start from the front, which is definitely the best place to do it.
He and Hunter-Reay swap the lead a couple of times but now the latter is out!
The No28 car's Honda engine has blown out and the yellow flags are out again.
That is a shame because the 2014 winner of this race would have made a very worthy opponent for Alonso on the last few laps.
Lap 131: There are around 170 miles to go and we are back racing.
Alonso overtakes Hunter-Reay on the high side for the lead and his team-mate seemed happy to let him by.
But we are almost immediately back under caution because there is a piece of debris on the track.
Back down to 110mph we go.
Lap 122: We are under caution for the fourth time in the his race – Buddy Lazier smashes into the same wall that put Sebastian Bourdais in hospital during qualifying – so we're back behind the pace car.
The top 10 currently reads: Hunter-Reay, Alonso, Rossi, Castroneves, Kanaan, Sato, Power, Montoya, Newgarden, Aleshin.
Lap 110: We're just past half of race distance and Alonso is still working with his Andretti team-mates up front.
He's currently third with Hunter-Reay and Rossi ahead of him.
Chilton has dropped back after an excellent battle with Alonso – can't imagine those two were often side-by-side when Chilton was at Marussia!
Lap 90: It's fair to say Alonso is really catching the eye – and not just because of the orange car.
The Spaniard is pulling off overtakes all over the place and looks like he is really enjoying himself.
He had dropped to seventh but is now battling Max Chilton, former F1 driver for Marussia, for third place.
Lap 75: We have our second restart of the day and Alexander Rossi hits the front with Ryan Hunter-Reay in second and Alonso moves up to third.
Lap 69: We're under caution again! Conor Daly has crashed out after carrying too much speed into a corner.
Unfortunately, Jack Harvey got caught in the cross-fire and both drivers are out. The two are medically fine though.
There's no red flag this time – we're running under caution with Fernando Alonso in fourth place.
Lap 56: We've had a 25-minute delay after that massive smash but we are back racing again.
Fernando Alonso will be hoping to lift the Indy 500 trophy at the first attempt
Lap 55: Pole-sitter Scott Dixon is out! The 36-year-old Australian collided with Jay Howard in a big smash and fortunately both drivers have walked away from crash.
We do have a red flag out though so we'll pause with Alonso still leading, alternating well with team-mate Rossi as they fuel-save together.
Lap 40: Fernando Alonso LEADS! He's completed his first pit-stop in IndyCar without any problems and since then, he has been flying after a few changes to tyre pressure.
And after jut 36 laps of his first Indy 500, Alonso lined up team-mate Alexander Rossi into Turn One and slid up the inside the take the lead for the first time.
Lap 20: Will Power, the 2014 IndyCar champion, has slipped back to 11th and is not running quickly. He's the 16th fastest man on track at the moment.
Alonso missed the jump of acceleration into Turn One at the start which explains his rapid slide backwards but now he's fighting back.
The Spanish rookie is back up to sixth place and appears to be enjoying the easier overtaking of IndyCar.
Lap 1: Predictably, we are running behind schedule but we have green flag racing!
Alonso has not had a great start and he has already lost five places on lap one. He's down in 10th.
5.10pm: Can Fernando Alonso actually win this? The bookies have him among the favourites at 6/1 and he would be just the 10th rookie in 101 runnings to win.
Indeed, he himself doesn't appear convinced he can win.
"I think [the win] is not the main purpose of this adventure now," Alonso said.
"I want to experience it and I want to live that moment but winning, I know that realistically I have lower chance than some of my opponents."
4.30pm: We're less than an hour away from getting underway in Indianapolis and excitement is reaching fever pitch.
The pre-race ceremony is pretty lengthy and includes a number of traditions including the playing of 'Taps', the American national anthem, a veteran salute and a flyover from B-52 Bomber.
Drivers will be told to start their engines at 5.14pm UK time with the race scheduled to get underway seven minutes later.