The German-born Krauss was tempted to become an Austrian citizen when playing at Rapid Wien and joined Austria's national team set-up. He made his debut for Austria in 1981 and was a participant at the 1982 FIFA World Cup. He earned 22 caps, no goals scored – however, he did score an own goal rather tellingly against West Germany in a game on 29 April 1981 that ended 0:2! He already played his final international match in 1984, after he left Austria to play in his native West Germany again.
Krauss started his coaching career at the German club SC Kapellen (1988–89), before he was called up to manage the amateur teams of Borussia Mönchengladbach (1989–90) and 1. FC Köln (1990). In 1991 he became the assistant coach at Mönchengladbach, and then from 6 November 1992 to 7 December 1996 he was appointed to be the Head-Coach there. With Borussia Mönchengladbach Krauss won the German Cup in 1995.
The late 90s were the most successful years in the coaching era of Bernd Krauss. 1997–1999 he managed the Spanish first-division team of Real Sociedad. In 2000, he shortly came back to Germany, where his job at Borussia Dortmund turned out as a big mistake. After only two months of his reigning at Westfalenstadion he was fired. Krauss then got back to Spain, where he coached RCD Mallorca (2001).
In August 2007 he was appointed manager of SK Schwadorf, replacing Attila Sekerlioglu. On 6. December the same year he was fired, placing only one point ahead of the relegation zone in the Austrian Second Division.
In January 2012, Krauss was appointed general manager of Étoile Sportive du Sahel then the head coach of the same team. In March 2012, he returned to his initial position of youth technical director as Faouzi Benzarti took up the post of the head coach of Étoile.