This was the first and to date, only Rose Bowl appearance for Indiana. Being an even-numbered year for the bowl game, Indiana wore their crimson jerseys as the home team and USC wore their white shirts as the designated visiting team.
The top-ranked and Pac-8 champion Trojans came into the game with a 9–1 record, losing only to Oregon State in a close 3–0 game. They earned the #1 ranking after claiming a close 21–20 win over rival and then-#1 UCLA in the last week of their season, guaranteeing their spot in the Big Ten/Pac-8 classic. They were led by their powerful tailback O. J. Simpson. Unlike the Big Ten and the old Pacific Coast Conference, the Pac-8 had no rule against a team going to the Rose Bowl in consecutive years, thus allowing the Trojans to go to the Rose Bowl for the second straight year.
The #4-ranked and co-Big Ten champion Hoosiers also came into the game with a 9–1 record, losing to Minnesota a week before defeating Purdue. A three-way league title championship was created when Indiana, Minnesota, and Purdue all finished with 6–1 league records, each defeating and losing to one of the other. Purdue was ineligible because they had played in the 1967 Rose Bowl, beating Southern Cal, 14-13. The conference's athletic directors voted to award the Rose Bowl bid to Indiana over Minnesota, albeit not unanimously. Indiana was considered the logical choice because they were the only Big Ten school that had never played in the game. Minnesota coach Murray Walmath argued in vain that the Gophers deserved the bid because their prior two Rose Bowl teams, after the 1960 and 1961 seasons, received at-large bids because there was no agreement between the Big Ten and the Rose Bowl at the time; thus, technically, the Gophers never had received a Rose Bowl bid pursuant to that arrangement. Ironically, if Purdue had beaten Indiana in the season finale, the Boilermakers would have had sole possession of the conference championship, but Minnesota presumably would have received the Rose Bowl bid as the second place team in lieu of the ineligible Boilers. Instead, Indiana scored a 19-14 upset over Purdue, giving Minnesota a share of the conference championship but costing them a trip to Pasadena. Quarterback Harry Gonso led the Hoosiers into their first ever bowl game.