Lyons attended the University of Alabama, where he played for coach Bear Bryant's Alabama Crimson Tide football team from 1975 to 1978. At Alabama, he had 202 tackles, 6 fumbles forced and 4 recovered. As a senior in 1978, he was recognized as a consensus first-team All-American, and helped lead the Crimson Tide to a National Championship in 1978. He was a key player in the set of fourth quarter plays known as "The Goal Line Stand" in the 1979 Sugar Bowl. It was Lyons that delivered what would become a famous line amongst Alabama fans just before the fourth-down play of the sequence. When asked by Penn State quarterback Chuck Fusina how far the ball was from the goal line, Lyons replied, "'Bout a foot. You better pass." Alabama was 31-5 during his years as a player.