Both teams were appearing in the Rose Bowl after being away for many years. The Oregon Ducks last appeared in the 1958 Rose Bowl, 37 years prior. The Penn State Nittany Lions appeared only one other time, the 1923 Rose Bowl, when the Rose Bowl stadium was used for the game for the first time.
Oregon opened with a win over Portland State, but then lost to non-conference opponents Utah and Hawaii. However, on October 1, 1994, the Ducks pulled off a surprise trouncing of #19 USC, a team that the Ducks had defeated only one other time since 1972. The Ducks followed this victory with a loss to Washington State. They would go on to win the rest of their conference games, including a 10-9 victory over Arizona. The season ended with a 17-13 win over Oregon State with the Rose Bowl on the line. Oregon finished in sole possession of first place, with Arizona and USC tied for second.
Penn State running back Ki-Jana Carter provided the highlight of the game when he scored an 83-yard touchdown on Penn State's first offensive play, prompting announcer Keith Jackson to utter the quote "They had him, they thought and then he was gone." After Carter's touchdown, Oregon came right back to tie the game. Penn State scored again and led 14-7 at halftime. But Oregon rode the short passing game of QB Danny O'Neil and kept the ball away from the Penn State potent offense. Oregon tied the game midway through the 3rd quarter. Penn State scored to take a 21-14 and got the ball back. Then came the key play of the game. Penn State S Chuck Penzenik intercepted O'Neil with just over 11 minutes left in the 3rd quarter, returning the ball to the Oregon 13-yard line. Carter then scored his third touchdown, a short 3-yard run that put the Nittany Lions ahead 28-14. Penn State would go on to win in comfortable fashion, 38-20.
Danny O'Neil contributed to 13 Rose Bowl records including individual records for passes attempted, passes completed, and passing yardage. As of 2008, his records still stood for most offensive plays (74), most passes attempted (61), most passes completed (41) and most yards passing (456).