Colchester reached the fourth round of the FA Cup, beating Bath City, Yeovil Town and Chesterfield on their way to meeting Arsenal.
Drawn at home, Colchester held Arsenal to a 2–2 Layer Road draw, but were defeated 4–0 at Highbury in the replay.
Colchester finished the season in fifth position, just nine points away from Hull City in second place, and ten behind champions Plymouth Argyle.
For the first time local police set a limit on crowd numbers at Layer Road for the Arsenal game with 16,000 witnessing the 2–2 draw.
Both big-money signings from last season, Neil Langman and John Evans, helped repay their transfer fees by scoring 27 and 16 goals respectively.