The tradition started in the 1982 Campbell Conference Finals when Vancouver played the Chicago Blackhawks. During game two of the series in Chicago Stadium, head coach Roger Neilson waved a white towel on the end of a Hockey stick in a mock surrender after being upset with the officiating.

Vancouver won the first game of the series in Chicago 2–1 in double overtime, but fell behind in game two 3–1. During the game the Canucks felt that referee Bob Myers was making questionable calls against them. A series of events in the third period ignited tempers. First, Vancouver had a goal disallowed. Soon after, there was a perceived non-call against Chicago, followed by a fourth consecutive penalty called against the Canucks. Denis Savard scored on the power play to put the Black Hawks up 4–1. This enraged the Canucks' bench. assistant coach Ron Smith yelled out "We give up, we surrender, we give up." Williams suggested to Neilson that he throw sticks onto the ice in protest. Neilson noted that he had done that before, and he had a better idea. He proceeded to take a white towel and place it on the end of a Hockey stick holding it up in a mock surrender; Tiger Williams was first to follow, along with captain Stan Smyl and another Canuck player. Neilson was ejected from the game along with Williams and Smyl.

Neilson was fined $1,000 and the franchise was fined $10,000 as a result of the incident. Myers later called Neilson's action "bush league". While NHL executive vice-president Brian O'Neill stated that the mock surrender "disgraced the championship series," Canucks' captain, Stan Smyl, noted that several players were "surprised" by Neilson's action because the coach had always been "respectful", and it was an "extreme way for him to react" and Vancouver goaltender, Richard Brodeur later noted that although they lost the game the atmosphere in the dressing room was so positive it was as if they had won.

When the Canucks returned home, they were greeted by fans at the airport waving towels in support of the team, they saw fire trucks with white towels hanging from the fenders. At home for Game 3, the Pacific Coliseum was loaded with white towels. "Towel Power" fever spread quickly among Canucks fans in British Columbia. Vancouver won game three 4–3 to take the lead in the series. For game four there were more fans waving towels as the Canucks won again 5–3.

An NHL tradition was born. Vancouver would win Game 5 in Chicago and face the powerful, two-time defending Stanley Cup champion New York Islanders in the Stanley Cup Final.