Before the 1992 games, only amateur players were allowed to play on the men's Olympic basketball team. At the 1988 Summer Olympics in Seoul, the United States national basketball team, made up of college stars, finished in third place. The defeat increased calls for professionals to be allowed to play in the Olympics. Borislav Stanković of FIBA advocated for this for years.
In 1989 FIBA modified its rules allowing professional athletes, such as NBA players, to compete internationally. FIBA agreed in April 1989 to allow professionals to play in the Olympics, despite American and Russian votes against the proposal. USA Basketball asked the NBA to supply players for its 1992 roster; the league was initially unenthusiastic, not foreseeing the cultural phenomenon that the team would become. Sports Illustrated was the first to nickname the forthcoming American roster as the "Dream Team", on the cover of its February 18, 1991, issue. So many corporate sponsors wished to use the team to advertise their products that some were rejected.
The first ten players for the team were officially selected on September 21, 1991: Michael Jordan and Scottie Pippen of the Chicago Bulls, John Stockton and Karl Malone of the Utah Jazz, Magic Johnson of the Los Angeles Lakers, Larry Bird of the Boston Celtics, Patrick Ewing of the New York Knicks, Chris Mullin of the Golden State Warriors, David Robinson of the San Antonio Spurs, and Charles Barkley of the Philadelphia 76ers. Most of the players were at or near the peaks of their NBA careers. Bird had back trouble, but was selected due to the team's historic nature. Robinson had played with the 1988 Olympic team, and was eager to earn a gold medal at Barcelona. Johnson was retained despite his retirement from the Lakers in November 1991 due to having tested positive for HIV. His teammates expected Johnson to die from the disease, and he later described his selection for the Olympics as "almost like a life saver", evidence that he could still overcome the illness and live a productive life. Ewing, Jordan, and Mullin had won gold at the 1984 games but Malone, for instance, had not made the team and had seen his non-selection in 1984 as a challenge.
Clyde Drexler of the Portland Trail Blazers and Isiah Thomas of the Detroit Pistons were the candidates for the final professional roster spot. Drexler was added to the team on May 12, 1992, with Christian Laettner of Duke University. As an acknowledgment to the previous amateur system, the US basketball committee decided to include one collegiate player on team, filling the final roster spot. Laettner was the only player without any professional experience, and was chosen over Louisiana State University's Shaquille O'Neal for the final spot on the roster.
Jordan refused Daly's suggestion that he serve as the public face of the team, and Bird and Johnson were selected as co-captains. At the time of the 1992 Olympics, these three superstars over the previous 13 seasons represented 10 NBA championship wins, 7 NBA Finals MVPs, 8 regular season MVPs, 6 regular season top scorers and formed the popular heart of this original Dream Team.
There was speculation that Thomas was not part of the team because Michael Jordan would participate only if Thomas was not on the roster. In the book Dream Team, author Jack McCallum quotes Jordan as saying, "Rod, I don’t want to play if Isiah Thomas is on the team," to Team USA selection committee member Rod Thorn. There was a widely held belief at the time that Jordan did not like Thomas because he was seen as the "ring leader" of the Detroit Pistons teams of the late 1980s and early 1990s, known as the "Bad Boys", that employed overtly physical tactics against Jordan in the NBA Playoffs that were meant to throw Jordan off of his game. Thomas is also alleged to have led a group of NBA veterans that refused to pass to Jordan in the 1985 NBA All-Star Game, in Jordan's rookie season. After the selection of the first ten members of the team, Magic Johnson released an official statement in support of Thomas, but years later it was discovered that his support was less than enthusiastic. In the book When the Game Was Ours, Johnson said "Isiah killed his own chances when it came to the Olympics. Nobody on that team wanted to play with him."
The selection of Laettner to the Olympic team over Shaquille O'Neal has increasingly become a source of controversy because of O'Neal's later accomplishments in the NBA. The selection committee considered several college players including, Harold Miner, Jimmy Jackson, Alonzo Mourning in addition to O'Neal and Laettner. O'Neal was the number one pick in the 1992 NBA draft, but Laettner was by far the more accomplished college player. Laettner won consecutive National Championships on the Duke Blue Devils in 1991 and 1992, was the Naismith College Player of the Year, and hit the game winning shot in the 1992 NCAA Eastern Regional final. Although O'Neal was a two time Consensus NCAA First Team All-American (1991, 1992) his team lost in the second round of the 1992 NCAA Men's Tournament. Laettner's success in his college career is ultimately what secured his position on the team.
To help preparation for the Olympics, a team of the best players in the NCAA was formed to scrimmage the professionals. USA Basketball selected college players whose play, it hoped, would resemble that of the Europeans the Dream Team would face. Members included the penetrating guard Bobby Hurley, all-around players Grant Hill and Penny Hardaway, outside shooter Allan Houston, and the tough Chris Webber and Eric Montross. Hill and Hardaway would play for the 1996 national team, and Houston on the 2000 team. In late June the Dream Team first met together in La Jolla, California, astounding and intimidating the collegians who watched the professionals practice. On June 24 the Dream Team lost to the all-stars 62–54, however, after underestimating the opposition. Daly intentionally limited Jordan's playing time and made non-optimal substitutions; Krzyzewski later said that the head coach "threw the game" to teach the NBA players that they could be beaten. The teams played again the following day, with the Olympians winning decisively in the rematch. Some of the college players visited Jordan's hotel room afterward and asked their hero for his personal items as souvenirs.
The Dream Team made its international debut on June 28, at the Tournament of the Americas, an Olympic qualifying event in Portland, Oregon. The team defeated Cuba 136–57, prompting Cuban coach Miguel Calderón Gómez to say, "You can't cover the sun with your finger." Marv Albert, who announced the game, recalled that "it was as if [the Americans] were playing a high school team, or grade school team. They were so overwhelming ... a blowout after blowout". The Cubans were the first of many opponents who were more interested in taking photos with the Americans than playing them. The next five games were also easy victories for Team USA, which ended the tournament on July 5 with a 127–80 victory over Venezuela in the championship game to win the tournament and be one of four Americas squads to qualify for the Olympics.
The team trained for the Olympics in Monaco for six days, practicing two hours a day and playing exhibition games against other national teams. During their time away from the court, the team spent time enjoying the nude beaches, Monte Carlo's casinos, and dining with royalty. There was no curfew; as coach Daly stated, "I'm not putting in a curfew because I'd have to adhere to it, and Jimmy'z [a noted Monte Carlo nightclub] doesn't open until midnight".
In one training session the group divided into two teams, Blue (led by Johnson, with Barkley, Robinson, Mullin, and Laettner) and White (led by Jordan, with Malone, Ewing, Pippen, and Bird). Drexler and Stockton did not play because of injuries. Daly told the teams to play "All you got now. All you got." White won, 40 to 36, in what Jordan recalled as "the best game I was ever in" and Sports Illustrated later called "the Greatest Game Nobody Ever Saw".
At the Olympics, the Dream Team stayed at a luxury Barcelona hotel instead of the Olympic Village due to security concerns. Fans enthusiastically greeted the Americans; they gathered outside the hotel, hoping to see their favorite players. "It was like Elvis and the Beatles put together," Daly said. Opposing basketball players and athletes from other sports often asked to have photographs taken with the players. Barkley recalled, however, that the team received death threats:
In our hotel, you had to have a picture ID to get in there, and we went to the pool on the roof of the hotel, there was like 10 guys standing around with Uzis. So it was kind of funny, it was like: Girl in bikini; dude with an Uzi; girl in bikini; guy with Uzi. People thought we didn't want to stay in the Olympic Village because we wanted to be big shots, but it was because we were getting death threats. They had told us this would be considered great by one of these terrorist groups if they could take out the Dream Team.
Barkley walked around the city alone despite the threats. When asked where his bodyguards were, he held up his fists and answered, "This is my security." McCallum later described Barkley as "the number one U.S. Olympic ambassador" for his visits to La Rambla, where he met with adoring crowds.
Jordan was the only player who studied the opposition, carefully watching game tapes. He and the other Americans enjoyed the opportunity to get to know each other in a casual setting, often playing cards all night and, for Jordan, playing several rounds of golf daily with little rest. Opposing teams were nonetheless overwhelmed by the talent of the American roster, losing by an average of 43.8 points per game. The Dream Team was the first to score more than 100 points in every game. Its 117.3 average was more than 15 points more than the 1960 US team. Johnson later recalled, "I look to my right, there's Michael Jordan ... I look to my left, there's Charles Barkley or Larry Bird ... I didn't know who to throw the ball to!" Herlander Coimbra of Angola, the Dream Team's first opponent, recalled that "those guys were on another level—a galaxy far, far away".
During the team's first Olympic game against Angola, Barkley elbowed Coimbra in the chest and was unapologetic after the game, claiming he was hit first. Barkley was called for an intentional foul on the play. Coimbra's resulting free throw was the only point scored by Angola during a 46–1 run by the US. Although this incident had no bearing on the final result (U.S. win 116–48), at the time there was a concern about the image of America to the rest of the world. After the game, Jordan said, "There just wasn't any place for it. We were dominating the game. It created mixed feelings, it caused a mixed reaction about the U.S. There's already some negative feelings about us." Even though this was the only incident of the game, it changed the narrative; instead of the Americans being viewed as a highly skilled team beating an underdog, some viewed them as bullies. Albert believed that the Americans used the Angola game to warn the other teams in the tournament.
Daly started Jordan in every game, and Johnson started in five of the six games he played, missing two games because of knee problems. Pippen, Mullin, Robinson, Ewing, Malone, and Barkley rotated in the other starting spots. Barkley was the Dream Team's leading scorer during the Olympics, averaging 18.0 points per game, although the player selection committee had been unsure of his inclusion, worried that he would not represent the United States well.
The closest of the eight matches was Team USA's 117–85 victory over Croatia in the gold medal game. Croatia, participating as an independent nation in the Olympics for the first time since its separation from the former Yugoslavia; briefly led the Dream Team by a score of 25–23 in the first half. By the end of the game the US had pulled away and Stockton agreed to a Croatian player's plea not to shoot. Pippen and Jordan aggressively sought the opportunity to guard Toni Kukoč of Croatia. He had just signed a contract with the Bulls for more money than Pippen, who believed that the team's negotiation with the Croatian had delayed his own contract. Tiring of hearing about Kukoč's talent, Pippen and Jordan agreed to, as Jordan later said, "not ... let this guy do anything against us." He told Johnson before the first Croatia game "I'm serious tonight", causing Johnson to reply "Uh oh." McCallum described the two Bulls as "rabid dogs" against the inexperienced Croatian. Croatia had lost to the Dream Team 103–70 in their first game. The only team besides Croatia to hold the margin under 40 points was Puerto Rico, which lost 115–77 in the quarterfinals.
Sports Illustrated later stated that the Dream Team was "arguably the most dominant squad ever assembled in any sport" and compared it to "Johnny Cash at Folsom Prison, the Allman Brothers at the Fillmore East, Santana at Woodstock." The team was elected to the Naismith Memorial Basketball Hall of Fame in 2010. Barkley later said, "I don't think there's anything better to representing your country. I don't think anything in my life can come close to that." Bird called the medal ceremony and the playing of The Star-Spangled Banner "the ultimate experience." Johnson said, "The 92 Dream Team was the greatest moment of my life in terms of basketball, bar none." Jordan said that the biggest benefit for him from the Olympics was that he learned more about his teammates' weaknesses. He later defeated Barkley, Malone, and Stockton in three NBA finals. As of 2014, 11 of the 12 players on the roster (all except Laettner) and three of the four coaches (all except Carlesimo) have been elected to the Hall of Fame as individuals.
Global interest in basketball soared due to the Dream Team. International Olympic Committee head Juan Antonio Samaranch stated that "the most important aspect of the [Barcelona] Games has been the resounding success of the basketball tournament, as we've witnessed the best basketball in the world." Subsequently, the number of international players in the NBA rose. On opening day of the 1991–92 season, NBA rosters included 23 international players from 18 countries. At the start of the 2011–12 season, there were 74 players from 35 countries.
Kobe Bryant and LeBron James said they believed their 2012 Olympic team would win against the Dream Team. Bryant said, "[T]hey were a lot older, at kind of the end of their careers. We have just a bunch of young racehorses, guys that are eager to compete." Barkley said that he "just started laughing" upon hearing Bryant's comment and that the Dream Team would win by double digits. Jordan added, "For [Bryant] to compare those two teams is not one of the smarter things he ever could have done... Remember now, they learned from us. We didn't learn from them." Bird joked, "They probably could. I haven't played in 20 years and we're all old now."