On November 4, 1979, the U.S. embassy was overrun by student protesters following the Iranian Revolution. 63 hostages were taken at the embassy, while Laingen and two others were seized at the Iranian Foreign Ministry Office. His wife, Penelope Lippitt Babcock, tied a yellow ribbon about the oak at their home during the crisis.[7] Laingen and 51 hostages were released on January 20, 1981, following 444 days of captivity. Laingen remains the last American head of mission to Iran, as direct bilateral diplomatic relations between the two governments were severed following the seizure of the embassy and have not been restored since.
After they were released from Iran in January 1981, Laingen and the other hostages arrived in the United States at the United States Military Academy, West Point, New York.[8] Four months later, on May 26, the West Point Class of 1981 honored him as their graduation banquet speaker during a formal dining event in the Cadet Mess Hall. Laingen was awarded the State Department's Award for Valor along with several other recognitions.
Laingen's next position was that of Vice President of the National Defense University, a post traditionally held by a senior diplomat. He retired from the Foreign Service in 1987 after 38 years of service. Laingen previously served as the President of the American Academy of Diplomacy.
She would later, in December 1979, tie a yellow ribbon around a tree on the lawn of her Maryland home, with the ribbon primarily symbolizing the resolve of the American people to win the safe release of the hostages in Iran.[11][12] Yellow ribbons would be featured prominently in the celebrations of hostages return home in January 1981. The house he and Penelope lived in was sold in 2013, and the lot was razed, with the stipulation by him and Penelope that the oak tree, with the yellow ribbon around it, had to stay on the property.[12]