BFC Dynamo developed a very successful youth academy during the 1970s. The team had an average age of only 22.7 years before the 1978–79 season. Young talented players in the team were Hans-Jürgen Riediger, Lutz Eigendorf, Norbert Trieloff, Michael Noack, Roland Jüngling, Rainer Troppa, Bodo Rudwaleit, Ralf Sträßer, Hartmut Pelka and Arthur Ullrich. The veterans in the team were Reinhard Lauck, Frank Terletzki, Wolf-Rüdiger Netz and Bernd Brillat. The young team was coached by 31-year-old coach Jürgen Bogs.
BFC Dynamo got off to a strong start in the 1978-79 DDR-Oberliga and won the first ten matches. Lutz Eigendorf defected to West Germany during a friendly match in Kaiserslautern on 20 March 1979. His defection was considered a slap in the face to the East German regime. BFC Dynamo finally won its first DDR-Oberliga title after defeating rival SG Dynamo Dresden 3–1 on the 24th matchday in front of 22,000 spectators at the Friedrich-Ludwig-Jahn-Sportpark. The team set a number of records during the league season.
BFC Dynamo made its debut in the European Cup in the 1979–80 season. The team made it all the way to the quarter-finals of the 1979-80 European Cup, where it faced Nottingham Forest under Brian Clough. BFC Dynamo won the first leg away 1–0. BFC Dynamo thus became the first German team to defeat an English team in England in the European Cup. The success in the league continued, but the competition was fierce. BFC Dynamo won the 1979-80 DDR-Oberliga by defeating first-placed SG Dynamo Dresden on the final matchday and the 1980-81 DDR-Oberliga by defeating second-placed FC Carl Zeiss Jena in the final matchday. BFC Dynamo continued to integrate young players from the youth department into the first team, such as Rainer Ernst in 1979, Bernd Schulz in 1979, Olaf Seier in 1979, Frank Rohde in 1980, Falko Götz in 1980 and Christian Backs in 1981.
BFC Dynamo reached the quarter-finals of the 1981-82 European Cup but was eventually eliminated by Aston Villa. BFC Dynamo now began a period of dominance in the league. The team secured its fourth consecutive league title at the end of the 1981-82 DDR-Oberliga and would go through the entire 1982-83 DDR-Oberliga undefeated. BFC Dynamo was only defeated by FC Karl-Marx-Stadt on the seventh matchday of the 1983-84 DDR-Oberliga. It was the team's first loss in 36 league matches. BFC Dynamo was drawn against Partizan Belgrade in the second round of the 1983–84 European Cup. The players Falko Götz and Dirk Schlegel defected to West Germany during a shopping tour in Belgrade before the return leg. Young talented froward Andreas Thom from the youth department would make his international debut in the match, as a replacement for Falko Götz. BFC Dynamo lost the match but advanced to the quarter-finals on goal difference. The team was eventually eliminated by AS Roma in the quarter-finals. It was the fourth time in five seasons that BFC Dynamo had been eliminated by an eventual finalist. The team reached the final of the 1983-84 FDGB-Pokal but was defeated by SG Dynamo Dresden.
BFC Dynamo was drawn against Aberdeen F.C. under Alex Ferguson in the first round of the 1984-85 European Cup. The team advanced, after a dramatic penalty shoot-out at the Friedrich-Ludwig-Jahn-Sportpark in the return leg. BFC Dynamo continued to dominate the league. The team scored a whopping 90 goals in the 1984-85 DDR-Oberliga. No other team would ever score more goals during a season in the DDR-Oberliga. BFC Dynamo faced rival SG Dynamo Dresden in the final of the 1984–85 FDGB-Pokal. The team lost the match 2–3. For the second consecutive season, SG Dynamo Dresden had stopped BFC Dynamo from winning the Double. The match between 1. FC Lokomotive Leipzig and BFC Dynamo on the 18th matchday of the 1985-86 DDR-Oberliga become historic due to a controversial penalty for BFC Dynamo in extra time. The match ended 1-1. BFC Dynamo captured its eighth consecutive league title on the final matchday of the 1985-86 DDR-Oberliga. The team finished just two points ahead of second-placed 1. FC Lokomotive Leipzig.