Lauda did not complete the season, departing Scuderia Ferrari after securing the title at the 1977 United States Grand Prix.
The season was marred by a horrific accident during the South African GP: Tom Pryce was unable to avoid hitting 19-year-old race marshal Frederik Jansen van Vuuren, who had tried to cross the track.
Countryman John Watson shared the front row with him in the Brabham, and Patrick Depailler in the six-wheeled Tyrrell was third on the grid.
Watson led for the first 10 laps until Hunt moved ahead and pulled away, with Mario Andretti's Lotus third, but soon the other McLaren of Jochen Mass took the place.
The second marshal, Fredrik Jansen van Vuuren, carrying a fire extinguisher was hit by the car of Tom Pryce at about 270 km/h (170 mph) and was killed instantly by the collision.
The race continued however, and Lauda won, his first since his own horror crash last year, with home hero Scheckter second, and Depailler's six-wheeler took third from Hunt in the closing laps.
The field, in a somber mood, went to this relatively new street circuit near Los Angeles, and Lauda took pole ahead of home hero Andretti, with Scheckter third.
Hunt inherited third but retired with a misfire, giving it to Watson until he lost places due to a spin, leaving Scheckter to take the final spot on the podium.
It was Scheckter who got the best start to beat Watson to the first corner, with Reutemann running third in the early stages until he was passed by his teammate Lauda.
Belgium was host to the seventh race of the season, and in qualifying at the Zolder circuit Andretti took a comfortable pole with Watson just beating the second Lotus of Gunnar Nilsson to second.
The track began to dry and everyone had to pit for tyres, and those who stopped early were the ones who benefited, as now Lauda was leading from Jochen Mass and Scheckter was down to fifth.
Behind second-placed Lauda, Ronnie Peterson completed the podium for Team Tyrrell after Scheckter retired with an engine failure.
The Swedish race at the isolated Anderstorp Raceway was full of anticipation after Nilsson's win last time out, but once again in qualifying, it was his teammate Andretti leading the way from Watson, with Hunt heading the second row.
Andretti however, was dominant until he had to pit due to a fuel metering problem with two laps left, handing the lead to Laffite who went on to take his first ever win ahead of Mass and Reutemann.
The next race was staged at the newly extended Dijon-Prenois circuit in France, and once again it was Andretti on pole with Hunt second and Nilsson third on the grid.
Scheckter ran third until his engine failed, thus giving the place to Andretti until he too suffered a similar fate, leaving Nilsson to take the final spot on the podium.
Scheckter battled for second with Hunt until the defending champion retired with an engine failure, giving third to Watson's teammate and home driver Hans-Joachim Stuck.
The field went to the Zandvoort circuit near Amsterdam in the Netherlands for the next round, and in qualifying Andretti took his fifth pole of the season with Laffite alongside on the front row, and Hunt third.
Hunt dropped back with brake troubles as the race progressed, and Scheckter retired when his engine failed, leaving Reutemann and Lauda in second and third.
Scheckter's hopes looked bleak as he qualified ninth to Lauda's seventh, as Hunt took pole from the Brabhams of Stuck and Watson.
Scheckter was on a charge and passed many drivers, including Lauda, in the early stages to get up to fourth, which became third when leader Stuck crashed out.
However, Hunt and Andretti continued to pull away from him and, with Lauda running fourth, Scheckter needed something extraordinary to happen to keep the title battle alive.
That did not happen, as the rest of the race passed on without incident, with Hunt winning ahead of Andretti and Scheckter, with Lauda's fourth place enough to make him the world champion.
But the race continued on, and with Andretti out, Hunt had no challengers left and he built a large gap, with teammate Mass second and Watson passing Scheckter for third.
However, both Mass and Watson had to retire within one lap of each other with engine and gearbox failures, and with Scheckter dropping back, Reutemann was second until he was passed by Laffite.
Hunt went on and capped off the season with a comfortable win, whereas Laffite ran of fuel on the last lap, handing over second to Reutemann and allowing Depailler to complete the podium.