In 1977, Walsh was hired as the head coach at Stanford where he stayed for two seasons. His two Stanford teams were successful, posting a 9–3 record in 1977 with a win in the Sun Bowl, and 8–4 in 1978 with a win in the Bluebonnet Bowl. His notable players at Stanford included quarterbacks Guy Benjamin and Steve Dils, wide receivers James Lofton and Ken Margerum, linebacker Gordy Ceresino, in addition to running back Darrin Nelson. Walsh was the Pac-8 Conference Coach of the Year in 1977.