In the 1935–36 FA Cup, Southampton entered the third round with an away fixture against First Division side Middlesbrough, against whom they lost 0–1 to exit the tournament at the first hurdle as they had done in so many recent seasons.

The lowest attendance of the season was a record-low 1,875 against Port Vale on 30 March 1936, two days after the club's new heaviest league defeat, 0–8 against Tottenham.

In June 1935, they signed Vic Watson from West Ham United, who had missed out on promotion the previous season on goal average only, as their new first-choice centre-forward.

[3] Also leaving Southampton in the summer were wing-half Frank Campbell, who had suffered a knee injury that developed into chronic arthritis which prevented him from continuing to play professionally (he subsequently joined Isle of Wight club Newport);[4] wing-half Frank Ward, who left on a free transfer to Southern League side Folkestone;[5] and out-of-favour inside-forward Alf Wheeler, who remained in the Second Division with Barnsley.

[10] Early victories included a hard-fought 4–3 against Swansea Town on the opening day (in which Vic Watson scored on his Saints debut), a 1–0 double over recently-promoted Doncaster Rovers, and a 3–0 defeat of Bradford Park Avenue.

[11] A 1–0 win over promotion hopefuls Leicester City on 4 January kept the side in the fight for a top-half finish, however this was followed by four straight defeats which saw them dropping all the way to 17th in the table.

[11][14] Despite this poor run, the Saints picked up their biggest win of the season when they beat Nottingham Forest 7–2 at The Dell, with Watson scoring a hat-trick.

[8] Despite this thrashing, the club responded in the final run-in with three wins from their last six fixtures, beating top-third sides Plymouth Argyle, Fulham and Blackpool to ensure their safety in the division.

In front of a crowd just shy of 30,000 at Ayresome Park, the Saints succumbed to a 0–1 defeat, with the only goal scored by winger Arthur Cunliffe while the visitors were "reorganising" following an injury to Johnny McIlwaine.

[21] During a break in between league games in January, the club hosted a friendly match against top-flight Wolverhampton Wanderers, which they lost 2–3 despite goals from Laurie Fishlock and Vic Watson.