The 1997–98 season was Colchester United's sixth consecutive season in fourth tier of English football. The season ended in success with Colchester achieving promotion after beating Torquay United 1–0 at Wembley Stadium in the Playoff final.

Colchester, once famed giantkillers, again lost to a non-League side when Hereford won a 1997/8 replay at Edgar Street on penalties. The FA Cup was truly Steve Wignall's Achilles Heel.

Meanwhile, the club was vindicated in the Courts when the George Burley case was settled at £300,000 and, with the lease on Layer Road due to expire in 2002, Kirklees McAlpine were commissioned as consultants for the new stadium.

Wignall broke the club's transfer record spending £50,000 on Neil Gregory. The dividend was paid when U's won 10 of their last 15 missing automatic promotion by one point, but more importantly qualifying for the play-offs. In the play-off semi-finals, Barnet held a 1-0 lead but in a powder-keg Layer Road atmosphere, a brace from David Gregory, the second in extra time, turned the tie in U's favour and earned a third trip to Wembley in six years.

Disappointingly moved to a Friday night to accommodate a meaningless England v Saudi Arabia friendly match, the Play-Off Final with Torquay attracted just 19,486 with live TV coverage another factor. David Gregory's 22nd minute penalty was enough to fire U's back to the third tier after 17 years away. Once again the streets of Colchester thronged to an open-top bus parade.

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