Lauda's Ferrari burst into a fireball after a crash on the second lap. He was pulled from the flames with severe burns and lung damage. Lying in hospital later that night, he was administered the last rites by a priest.
Typically for Lauda, he saw things differently. At the age of 27, he summoned his will of iron to find a way back -- calling it the most courageous decision in his F1 career.
"First, I knew about the danger," says Lauda, who wears a baseball cap to hide the scars left by his fiery crash.
"I went to every accident, even if I was not involved or didn't see it, to understand what happened.
"The accident did not surprise me because I knew it was dangerous. I told myself, 'I was lucky, I'm still alive so why not as I'm alive, God help me, let's try.'
"This was the big challenge ... a comeback. For me it was clear, that the longer I wait, the more difficult it's going to be because the more worries you start building up.
"I had to do it as quick as possible to overcome these problems and to keep racing as before."
Just 42 days after his crash in Germany, Lauda was back in the cockpit of a Ferrari and racing to defend his title at the Italian Grand Prix.
It was a comeback that defied the medics and his rivals, but it was another brave decision that decided the title.
Lauda refused to race in the torrential rain in the title-deciding Japanese Grand Prix, a decision that saw the title swing into the hands of his rival James Hunt.
"I would take the same decision today," Lauda says. "It was stupid to race."
The story of those defining points has been turned into "Rush," a movie by F1 fan and director Ron Howard.
For Lauda, his self determination has continued to guide him to this day.
After winning a second title with Ferrari and moving to the Brabham team, he quit F1 with two races still to run in the 1979 season.
Lauda said he "tired of driving round in circles," and a new career as an airline boss beckoned.
However, a second coming for McLaren brought his third and final world title in 1984, before an inevitable second retirement followed.
Lauda is now an opinionated but respected voice in the inner circle of F1's paddock, where he patrols as a non-executive chairman of the Mercedes team and a TV analyst.
If "Rush" is the movie of his life then the soundtrack has to be Frank Sinatra's "My Way."
"I do not want to change," Lauda insists. "I will continue all the way through to the end of my life in this way."