Results improved, but the team failed to get back into contention for promotion and ultimately finished sixth in the division.

The highest attendance recorded at the club's home ground, Priestfield Stadium, was 16,000 for the FA Cup match against West Bromwich Albion.

[5][6] He replaced Gerry Summers, who had been dismissed from his post at the end of the previous season, partly due to controversy surrounding his decision to release several popular players, including Damien Richardson, from their contracts.

[16] Peacock also attempted to sign Winston DuBose, a goalkeeper whom he had coached in the United States, but the player was refused a UK work permit.

[35][36] Against Huddersfield Town on 17 October, Gillingham took a 3–0 lead inside the first 20 minutes and, although their opponents scored twice, held on for a third consecutive victory.

[44] Gillingham ended October second in the table, behind league leaders Doncaster Rovers only on goal difference;[45] Peacock was the recipient of the division's Manager of the Month award.

[49] Their stay in first place was short-lived, however, as they dropped to fourth after the final match of November,[50] a 2–0 defeat away to Carlisle United during which John Sharpe was sent off.

[58][59] As a result, Gillingham played only two Third Division matches in January, both of which they lost, being defeated 2–0 by both Lincoln City and Preston North End.

[27][63] Adams had previously played as a winger but adapted well to the left-back position,[64] and was an ever-present in the team for the remainder of the season.

[66] The forward, signed from amateur club Crockenhill of the Kent League, reportedly in exchange for a set of tracksuits,[66][67] would go on to make over 200 appearances and score over 100 goals for Gillingham before playing at the highest level of English football and in two FIFA World Cup tournaments.

[69] Peter Shaw, a defender signed from Charlton Athletic, made his debut on 20 February in a 1–1 draw with Exeter City.

[27] He scored the winning goal against Plymouth, the team from which he was on loan,[71] to leave Gillingham in 11th place at the end of February;[72] Cascarino and Price would be the first-choice forwards for the remainder of the season.

[76] Gillingham extended their unbeaten run with a 1–1 draw against Doncaster Rovers on 3 April; Lee played his first game since January in place of Cascarino.

[77][78] Three days later, Lee was named only as the substitute against Chesterfield but came off the bench to score twice as Gillingham came back from two goals down with 20 minutes of the game remaining to win 3–2.

[54][80] The team's successful run continued with a 2–0 victory over Fulham,[81] but Gillingham lost their next two matches to effectively end any realistic chance of promotion.

[9] They achieved a draw on 24 April away to Carlisle United,[82] who were top of the table at the time,[83] but this was immediately followed by a defeat to Bristol City, who were second from bottom.

[22] The last game of the campaign was at home to Reading on 18 May; Sharpe and Lee scored in a 2–1 victory which meant that their team finished the season sixth in the Third Division table, seven points below the promotion places.

The initial game at Plymouth's ground, Home Park, ended in a goalless draw, necessitating a replay at Priestfield.

Gillingham fell behind to a goal from their semi-professional opponents but White equalised from a penalty kick and the game ended in a draw.

[97] The first match of the two-legged tie was played at Colchester's Layer Road ground; Gillingham lost 2–0 to their lower-division opponents.

The initial round-robin stage of the 1981–82 Football League Group Cup, a newly introduced competition,[99] took place prior to the first Third Division game of the season.

[101] In the matchday programme for the final game of the season, the club dismissed the Group Cup as having been a "pre-season warm-up tournament",[104] even though the latter rounds of the competition extended until April 1982.

[110] Mel Sage, an 18-year old from the club's youth team, made his professional debut in May; he would go on to play well over 100 games for Gillingham before stepping up the Second Division when he was transferred to Derby County in 1986.

[112] FW = Forward, MF = Midfielder, GK = Goalkeeper, DF = Defender Bruce was voted the club's player of the year by supporters.