There was only a week between the United States East Grand Prix and the race at Mosport Park but there was significant change with World Champion deciding that he was fed up with Ferrari. He declined to race. The team had been planning to run a third car for Gilles Villeneuve and so he merely took over. The only other change was the return to Shadow of Riccardo Patrese. There were worries about safety over the Mosport Park bumps and in practice Ian Ashley's Obex Oil Hesketh flipped after cresting one of the brows. It somersaulted over the barriers and collided with a television tower. Ashley (who had suffered nasty leg injuries in a crash at the Nürburgring in 1975) was seriously hurt again and rescue operations were inefficient and time-consuming. The lack of safety of Mosport was underlined when Jochen Mass spun into the guardrail later that day and it was flattened.

The grid consisted of Mario Andretti on pole by six-tenths in his Lotus with James Hunt second fastest in the McLaren. Then came Ronnie Peterson (Tyrrell), Gunnar Nilsson (Lotus), Mass (McLaren), Patrick Depailler (Tyrrell), Alan Jones and Riccardo Patrese (both in Shadows), Jody Scheckter's Wolf and John Watson's Brabham-Alfa Romeo. The Ferraris were not competitive with Carlos Reutemann 12th and Villeneuve 17th.

In the race Andretti took an early lead with Hunt and Mass in pursuit and the order remained unchanged at the front until the 60th lap when the two leaders were coming up to lap third-placed Mass. Hunt scrambled ahead of Andretti and then there was a misunderstanding and the two McLarens collided and spun off. Andretti went back into the lead but on lap 78 the Lotus stopped with an engine failure and so Scheckter took the victory with Depailler second and the recovering Mass third after Brambilla crashed on oil from Andretti's engine and smashed into Patrese's Shadow which had gone off a lap early. Jones finished fourth with Patrick Tambay fifth for Ensign with Brambilla being classified sixth.