Finishing strongly, the Sonics ended the regular season with a 47–35 record and made the 1978 NBA Playoffs. After eliminating the Los Angeles Lakers, the defending champion Portland Trail Blazers, and the Denver Nuggets, they almost defeated the Washington Bullets by taking a 3–2 lead in the 1978 NBA Finals. In a 93–92 Game 3 victory, Johnson blocked seven shots—the most blocks in NBA Finals history for a guard. The Sonics lost in seven games, however, partly because of Johnson’s Game 7 scoring drought, in which the second-year guard missed all of his 14 field goal attempts. Johnson later acknowledged that he simply “choked”; he vowed never to repeat this again and credited this game as an important lesson to become a better player.

Johnson and the Sonics got their revenge in the 1978–79 season. After clinching the Pacific Division with a 52–30 record, the team met the Bullets again in the 1979 NBA Finals. After losing Game 1, the Sonics won the next four games to take the finals series, helped by Johnson who averaged almost 23 points along with six rebounds and assists per game. He scored 32 points in a Game 4 overtime victory, and was named NBA Finals MVP. It was during this season that Johnson established himself as one of the best guards in the league; he averaged 15.9 points and 3.5 assists per game, and made his first All-Defensive First Team and All-Star Game appearance.

In 1,100 games, Johnson scored 15,535 points, grabbed 4,249 rebounds and gave 5,499 assists, translating to career averages of 14.1 points, 3.9 rebounds and 5.0 assists per game. Known as a defensive stalwart, he was elected into nine straight All-Defensive First or Second Teams. NBA legend George Gervin said in a podcast with journalist Bill Simmons that Johnson was the hardest defender he ever played against. Johnson is also acknowledged by the NBA as a “money player” who was clutch in decisive moments, such as scoring 32 points for his team in a Game 4 overtime victory in the 1979 NBA Finals, playing smothering defense on Magic Johnson in the 1984 NBA Finals, and converting a last-second layup in Game 5 of the 1987 Eastern Conference Finals after a Larry Bird steal.

In the 1984–85 season, Johnson continued playing smothering defense, earning his next All-Defensive Second Team call-up while averaging 16.9 points and 7.3 assists per game. The Celtics met the Lakers in the 1985 NBA Finals again. Johnson’s big moment came in Game 4: when the score was tied at 105, teammate Larry Bird had the ball in the last seconds. Being double-teamed by Lakers Kareem Abdul-Jabbar and Magic Johnson, Bird passed to the open Johnson, and the guard sank a 19-ft buzzer beater to win the game. The Lakers, however, took their revenge this time, winning the series in six games, powered by venerable 38-year-old Finals MVP Abdul-Jabbar. Johnson described this loss as one of the toughest in his career, because the Celtics were “close [to winning the series]”, but “could not get the job done”.

The Celtics were unable to repeat their title in 1987 despite several dramatic playoff victories. Johnson played strong defense again, earning yet another appearance on the All-Defensive First Team, and the Celtics embarked on a nail-biting playoff campaign. In the 1987 Eastern Conference Semifinals, the Celtics split the first six games against the Milwaukee Bucks. In the deciding Game 7, which the Celtics won, Johnson had a spectacular play with 1:30 left in the game: a Celtics ball threatened to fly out of bounds, but Johnson dived for it and whipped it backwards in mid-air against Bucks center and former Sonics teammate Jack Sikma. The ball bounced off Sikma before going out of bounds, and the Celtics maintained possession.

According to Johnson this was his favorite play of all-time. Games 6 and 7 also featured a feud, this time between Pistons forward Dennis Rodman and Johnson. In Game 6, which the Pistons won, Rodman taunted Johnson in the closing seconds by waving his right hand over his head. When the Celtics took Game 7, Johnson went back at Rodman in the last moments of the game and mimicked his taunting gesture. In the 1987 NBA Finals, however, the Celtics succumbed to the Los Angeles Lakers 4–2 as Lakers playmaker and Finals MVP Magic Johnson put up a great performance, averaging 26 points and 13 assists throughout the series.

The next three seasons were disappointing for the aging Celtics. In the 1987–88 season, Johnson averaged 12.6 points and 7.8 assists, but in the 1988 Playoffs, the Celtics were unable to beat the Detroit Pistons in the Eastern Conference Finals. In the next season, Johnson (who statistically declined to 10.0 points and 6.6 assists per game) and his team made the 1989 NBA Playoffs on a meager 42–40 record (largely due to the absence of star forward Larry Bird for almost the entire season), but were immediately eliminated in the first round (again, largely due to the absence of the injured Larry Bird.) The following 1989–90 NBA season was Johnson’s last. The now 35-year-old playmaker relinquished his starting point guard role to younger John Bagley, but when Bagley dislocated his shoulder, Johnson returned with a high level of performance and was lovingly called “our glue man” by coach Jimmy Rodgers. In that season, Johnson started in 65 of his 75 games, averaging 7.1 points and 6.5 assists, but the Celtics failed to survive the first round of the 1990 NBA Playoffs.

On December 13, 1991, the Celtics franchise retired his number 3 jersey. Johnson said he would always be a Boston Celtic, and remarked that seeing his number in the rafters gave him a “special feeling”. However, Johnson did not live to see an induction into the Naismith Memorial Basketball Hall of Fame, a fact that has been a considerable point of debate with sports journalists. Bill Simmons of ESPN called his Hall of Fame snub an “ongoing injustice”, stating that according to him, Joe Dumars – a Hall of Famer known for strong defense rather than spectacular scoring, like Johnson – was no better [a basketball player] than him. Colleague Ken Shouler called Johnson “one of the first guys I’d give a Hall [of Fame] pass”. Contemporary Boston Celtics Hall of Fame forward Larry Bird gave Johnson ultimate praise, calling him the best teammate he ever had in his autobiography Drive, which is especially significant considering Bird’s teammates included Hall of Famers Kevin McHale, Robert Parish, Bill Walton, and Tiny Archibald. On April 3, 2010, ESPN Boston reported that Johnson was posthumously elected to the Basketball Hall of Fame. This was officially confirmed two days later when the Hall released the list of 2010 inductees.

After retiring as a player, Johnson worked as a scout for the Celtics. In 1993, he became an assistant coach for the Celtics, a position he held until 1997. After spending several years outside the limelight, he returned as an assistant coach for the Los Angeles Clippers in 2000, and spent four seasons there. For 24 games toward the end of the 2002–03 season, Johnson served as interim head coach after the departure of Alvin Gentry. Johnson later worked as a scout for the Portland Trail Blazers, and in 2004 he was named head coach of the NBA Development League’s Florida Flame. He became head coach of the NBADL’s Austin Toros the following season, and held that position until his death two years later.

On October 20, 1997, Johnson was arrested and detained overnight for allegedly holding a knife to his wife’s throat and threatening his 17-year-old son. Johnson was later charged with aggravated assault and was ordered to stay away from his family. The prosecutors dropped the case several months later after his wife declined to press charges. Johnson reportedly went to counseling to repair his marriage.

On October 26, 2007, a learning center was dedicated in Johnson’s name in the Central Branch of the YMCA of Greater Boston. The center was made possible by the donations and effort of Larry Bird and M.L. Carr. Johnson’s family, Danny Ainge, Carr, and members of the YMCA and local community were present for the ribbon cutting ceremony. Donna Johnson said on behalf of her husband, “If Dennis were alive he would really appreciate the thought and love the idea of the Learning Center.”

On February 22, 2007, at the Austin Convention Center, Johnson had a heart attack and collapsed at the end of the Austin Toros’ practice. After being rushed to a nearby hospital, he could not be revived and was later pronounced dead. Johnson was survived by his wife and his children. Johnson’s death was met with shock throughout the NBA. Among others, contemporary Celtics colleague Danny Ainge called him one of “the most underrated players of all time […] and one of the greatest Celtics acquisitions,” and one-time rival Bill Laimbeer called him “a great player on a great ballclub.”