 In 1980–81 he was again named the Flyers' top defender and was selected to play in his second All-Star Game, but his season was ended prematurely due to a knee injury which required surgery.12 games into the 1981–82 season, Dailey shattered his ankle catching a rut in the ice in a game in Buffalo.The injury required 3 screws to repair and forced his retirement at the age of 28.