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The Dream Team won in the end 85-76 in the preliminary round game, but led by just five points with a minute left.
Lithuania has no NBA players in its ranks. Most of Lithuania and many people all over the world watched.
The win against Lithuania is the smallest margin of victory since the U.S. began sending professional basketball players to the Games in 1992.
At the Olympic Games in Barcelona in 1992, no team came within 32 points of the United States. Four years later, in Atlanta, no one got closer than 22.
Lithuania had a chance to cut the U.S. lead to three points with a minute left, but Eurelijus Zukauskas missed two crucial free throws.
Following Zukauskas' misses, American Vince Carter from the NBA's Toronto Raptors scored six of the U.S. team's final eight points.
"Don't ask me how I made that, it surprised me. A prayer - it was answered," the Associated Press reported Carter as saying.
If Lithuania had won, "It would have been one of the biggest upsets in the history of sports, not just the Olympics," AP reported.
Lithuania is the first team to hold a second-half lead against the Dream Team. The Americans found themselves trailing when Ramunas Siskauskas scored with just less than 18 minutes remaining to give Lithuania a 50-49 lead.
A sellout crowd of 10,000 came to their feet in Sydney's Dome Arena.
Young Lithuanian tourists present at the Dome started to chant in Lithuanian, "We will win!" Almost the entire Dome was supporting the Lithuanians, except astonished American tourists, including Chelsea Clinton, daughter of American president Bill Clinton.
The U.S. team seemed to ignore coach Rudy Tomjanovich's game plan, which was based on tight defense.
In fact, the Lithuanian defense at times looked better.
"Their defense was very good," U.S. Captain Garry Payton said after the game, according to the Lietuvos Rytas daily.
Foolish errors may have cost Lithuania the game in the end, as did poor foul shooting. Lithuania made 27 of 43 foul shots. The U.S. shot 29 of 33 from the charity stripe.
"If it was going to happen, it would have been tonight. The stars were all lined up tonight. We had it right where we wanted it," AP quoted Don Nelson, Lithuania's assistant coach, as saying after the game.
Lithuania's head coach Jonas Kazlauskas agreed with Nelson.
Kazlauskas told Lietuvos Rytas that his team could have won, but he wanted to save the team's energy for more important future.
Lithuania could meet the Dream Team again in the semifinals.
Some unnamed Lithuanian players told Lietuvos Rytas that Lithuania could have beaten the Dream Team had Kazlauskas deviated from his plan to allow all 12 Lithuanian players to compete against the Americans, even those who have sat the bench in previous games.
"In one way I wish Lithuania had won - there is a lot of cockiness by the Dream Team. On the other hand, it would have been harder to visit Lithuania if the Lithuanians had won, because I have a feeling any person with a drink in his or her stomach would feel the need to spend hours reliving it for me over and over again," said Paul Beckman, a former Vilnius resident who watched the game in Texas.
Sergejus Jovaisa, a retired Lithuanian basketball star and bronze medallist at the 1992 Olympics, said that Lithuania could beat the Dream Team, but they need NBA all-star Arvydas Sabonis to do it. Sabonis contributed to Lithuania's victories in Barcelona and Atlanta.
The Lithuanian men's basketball team have won bronze medals in the two previous Olympic Games in Barcelona and Atlanta. After Atlanta, some Lithuanian stars, including NBA player Sarunas Marciulionis, retired.
On the eve of the Olympic Games in Sydney, Lithuania was shocked when the four best Lithuanian players said that they had leg injuries and would not be going to Sydney. These four are Sabonis, Zydrunas Ilgauskas of the NBA's Cleveland Cavaliers, Arturas Karnisovas of Barcelona, and Virginijus Praskevicius of the Belgian team Ostende Telindus.
Lithuania has sent a very young team to Sydney. However, it still could medal in Sydney.
The game Sept. 21 provoked a slight shock in the media around the world. CNN, calling itself the world's news leader, drew a chuckle from Lithuanians soon after the game. During a post-game report, CNN placed "Lithuania" next to the flag of Kuwait.