The 1982 Fiesta Bowl was the first Fiesta Bowl played in January, in light of the bowl game's newgained popularity due to the sunny climate with had games with a team ranked in the top 10 appearing in the 8 of the previous 10 bowls. This one was no different, matching the Penn State Nittany Lions and the USC Trojans to end the 1981 NCAA Division I-A football season for both teams.

The Nittany Lions had spent a week ranked #1 before a loss to Miami knocked them to #6 and a loss to Alabama ultimately dropped them out of championship contention though they finished the season on a two game winning streak and ranked in the top 10 for the second straight year. USC finished third in the Pacific-10 Conference after losses to Arizona (which knocked them out of being ranked #1) and Washington (which not only knocked them out of being ranked #3 but also cost them the Pac-10 title) relegated them to this game. One notable highlight was Marcus Allen, who after winning the Heisman Trophy with the first 2,000 yard season, was playing his final collegiate game. This was Penn State's second straight Fiesta Bowl and USC's first.

USC had more turnovers and punts than Penn State while being outrushed and outyarded by Penn State in a wet soggy game that was at one point 24-7. Curt Warner scored on a touchdown run early in the first quarter on his first carry of the game. But USC would respond when Chip Banks returned an interception return 20 yards for a touchdown. Gregg Garrity caught a long touchdown pass from Todd Blackledge 52 yards away to give Penn State the lead they would never again relinquish. Franco would add a field goal before the half ended to give Penn State a 17-7 halftime lead. Warner would add in his second touchdown of the day to make it 24-7 as USC could only respond with a field goal by Jordan. But when USC had to punt later in the quarter, Dave Paffenroth's punt was blocked as it landed out of the end zone for a safety, which was ultimately the final score as the two teams settled down to make for a scoreless fourth quarter as Penn State won their second straight Fiesta Bowl.

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