Summary

First Round
The format of the competition stayed the same as in 1974: 16 teams qualified, divided into four groups of four. The top two teams in each group would advance to the second round, where they would be split into two groups of four. The winners of each group would play each other in the final, and the second place finishers in the third place match.
A controversial fact surrounding the 1978 World Cup was that Argentina had suffered a military coup only two years before the cup. Because of this, some countries, most notably the Netherlands, considered publicly whether they should participate in the cup. Despite this, all teams eventually participated without restrictions. Allegations that Dutch star Johan Cruijff refused to participate because of political convictions were refuted by him 30 years later. More controversy surrounded the host, Argentina, as all of their games in the first round kicked off at night, giving the Argentines the advantage of knowing where they stood in the group. This issue would arise again in Spain 1982, which prompted FIFA to change the rules so that the final two group games in subsequent World Cups would be played simultaneously.
The first round produced several surprises. Poland won Group 2 ahead of world champions West Germany, after holding the Germans to a goalless draw and then beating Tunisia and Mexico. The Germans played out a second goalless draw against Tunisia, and only redeemed themselves with a 6-0 thrashing of Mexico. Although they failed to qualify for the second round, Tunisia made history by beating Mexico 3-1. It was the first time that any African team had won a match at the World Cup finals.
Peru pushed the Netherlands into second place in Group 4, where Scotland missed out on goal difference for the second successive tournament. Teofilo Cubillas was outstanding for Peru, scoring twice against Scotland in Peru's 3-1 win and hitting a hat-trick in their 4-1 victory over Iran. Rob Rensenbrink of the Netherlands also scored three times against Iran, scoring all the goals as the Dutch won 3-0. Scotland drew with Iran 1-1 and the only highlight of their campaign was a 3-2 victory over the Netherlands in their final group game which was not enough to prevent elimination. Iran, the reigning Asian champions, went out of the tournament winless.
The biggest surprise of all came in Group 3, where Austria finished ahead of Brazil. The Austrians beat Spain and Sweden, while Brazil were held to draws by the same two teams. The draw with Sweden was especially controversial, due to the referee ending the game just as Zico headed the ball into the back of the net, a goal that would have won the game for Brazil. Brazil needed to beat Austria in their final group game to be sure of progressing to the second round, and managed a 1-0 win thanks to a goal from Roberto Dinamite. Brazil and Austria thus finished with the same number of points and the same goal difference, but Austria won the group by virtue of having scored more goals.
Group 1 had the strongest line-up of teams in the first round, featuring Italy, the host Argentina, France and Hungary. The two places in the second round were claimed before the final round of games, with Italy and Argentina both beating France and Hungary. The Italy-Argentina game decided who topped the group, and a goal from Roberto Bettega midway through the second half was enough to give that honour to Italy. It also forced Argentina to move out of Buenos Aires and play in Rosario.