The U.S. squad was ranked 7th out of 12 teams at the beginning of the games. The Soviet hockey team, considered the best in the world, was the clear favourite. They had beaten a National Hockey League (NHL) All-Star team the previous year and crushed the American team 10–3 in an exhibition game a week before the Olympics. In fact, the U.S.S.R. was virtually unbeatable in Olympic competition between 1956 and 1992. The only teams to break the Soviet hold on the gold medal were the American teams of 1960 and 1980, when the Winter Olympics were held in the United States.

Craig, an All-American goalie at Boston University before joining the U.S. ice hockey team, played nearly every minute of every game. He led the U.S. team through a surprising series of victories in the first round, typically giving up an early goal or two but then shutting out the opponents in the final period. The U.S. team made it to a semifinal game against the Soviets, where Craig made 39 saves and fought off a heavy barrage of shots in the game's final minutes. The Americans beat the Soviet team 4–3 and went on to beat Finland 4–2 in the championship game. One of the enduring images of the 1980 Games was of Craig, wrapped in the American flag, searching the stands for his widowed father in order to share the gold-medal-winning victory.

Following the Olympics, Craig was recruited by the NHL's Atlanta Flames. Media pressure and injuries hurt his performance, however, and his professional career ended in 1981 after only 27 games with Atlanta, the Boston Bruins, and the Minnesota North Stars.