With Alan Jones and Nelson Piquet separated by one point in the battle for the World Championship, there was much excitement in Canada. There were some changes in the driver lineup as well as Vittorio Brambilla had announced his retirement and the Alfa Romeo team had decided to sign up a youngster called Andrea de Cesaris. In addition there was a rainbow-colored RAM Williams entered for Kevin Cogan and Arrows had Derek Warwick with the team in case Jochen Mass was not fit to race. In addition Mike Thackwell was entered in a third Tyrrell. The second Unipart Ensign was missing and so Geoff Lees was out of work and Team Lotus decided not to run a third car for Nigel Mansell.

The two World Championship contenders were first and second on the grid with Piquet ahead of Jones while Didier Pironi (Ligier) qualified third, Bruno Giacomelli (Alfa Romeo) fourth, Carlos Reutemann (Williams) fifth and Keke Rosberg sixth in his Fittipaldi, The top 10 was completed by John Watson in the McLaren, the impressive de Cesaris, Jacques Laffite (Ligier) and Héctor Rebaque (Brabham). The Michelin cars were all in trouble with the Ferraris and Renaults off the pace. Jean-Pierre Jabouille was 13th and René Arnoux 23rd while Gilles Villeneuve was 22nd and reigning World Champion Jody Scheckter failing to qualify.

At the start Jones made the better start but Piquet refused to give way and the pair collided. Jones was able to continue but there was chaos behind as car after car became involved in the shunt. In the end eight cars were damaged, including two of the three Tyrrells, both Fittipaldis, Andretti's Lotus, Villeneuve's Ferrari and Jochen Mass's Arrows. The race was stopped.

Piquet, Emerson Fittipaldi, Villeneuve, Andretti and Mass were all able to restart in spare cars, while Jarier took over Thackwell's car, leaving the New Zealander and Derek Daly unable to take part. Rosberg started from the pitlane in a repaired car.

Jones took the lead again with Pironi also jumping ahead of Piquet. The Brazilian soon overtook the Ligier and then Jones to go into the lead. As Piquet drove away there was lots of action behind him as Giacomelli spun out of fourth place. Watson was up to fourth.

On lap 24 Piquet suffered an engine failure. This left Jones in the lead and if he finished he would be World Champion as the scoring system meant that Piquet could not add enough to his points total at Watkins Glen to beat Jones. But now Pironi began to close up on Jones, despite suggestions that he was about to penalized a minute for jumping the start. Further back down the order Prost overtook Laffite and began to close up on Reutemann. But on lap 26 Jabouille's Renault suffered a suspension failure and smashed into the barriers. Jabouille suffered serious leg injuries and had to be cut from the wreckage of the car.

Prost overtook Reutemann and was chasing after third-placed Watson when his suspension failed.

Pironi's penalty was confirmed and eventually Jones let Pironi go into the lead and began to nurse his car to the finish. In the closing laps Watson had a spin and dropped from third to fourth.

Thus Pironi won on the road but with his penalty added he dropped to third. Williams had a 1-2 and Jones was World Champion.