The 1981 NCAA Division I Basketball Championship Game took place on March 30, 1981 between the North Carolina Tar Heels and Indiana Hoosiers at The Spectrum in Philadelphia.

Indiana fielded its first men's basketball team in the 1900–01 season, posting a 1–4 ledger under coach James H. Horne. In their first game the Hoosiers traveled to Indianapolis and lost to Butler 17–20. Indiana's first victory was a 26–17 win over Wabash College that same year.

By 1969–1970 basketball season, the Hoosier women began to play by the "men's rules" for the first. In order to keep the basketball program within the budget, faculty served as game officials, referees, seamstresses, manages, and coaches without additional compensation for their time.

Their head coach was Bobby Knight, who was in his 11th year. The team played its home games in Assembly Hall in Bloomington, Indiana, and was a member of the Big Ten Conference . The Hoosiers finished the regular season with an overall record of 19–10 and a conference record of 12–6, finishing 2nd in the Big Ten Conference.