A tragic season saw forward John Lyons take his own life, while Allan Hunter resigned two months later, replaced by his assistant Cyril Lea in February.

Allan Hunter continued in his role as player-manager for the new season, with former Ipswich Town coach Cyril Lea his assistant.

Following a 0–0 draw at Layer Road, with England international Peter Shilton in inspired form, the U's could not repeat their heroics from 1974 at The Dell, losing 4–2 and making another early exit.

After this incident and having to give up his own playing career, Allan Hunter resigned as manager in January with Colchester in seventh place.

However, four defeats in 17 days during April cost the U's and they finished sixth position in the league, missing promotion by just two points.