Davie Hay was dismissed as manager during the close season following a disappointing 1986-87 campaign, in which the team, despite holding a 9-point lead at the turn of the year, lost the league title to a resurgent Rangers F.C.

The playing squad underwent significant changes in the summer of 1987, with key players such as Brian McClair, Mo Johnston, Murdo MacLeod, and Alan McInally all departing.

After early speculation about a return for fans' favorite Charlie Nicholas, the club eventually signed forwards Frank McAvennie and Joe Miller.

The team also reached the Scottish Cup Final after a dramatic comeback against Hearts in the semi-final, scoring twice in the last four minutes to win 2–1.

In the final, Celtic again came from behind to defeat Dundee United, with Frank McAvennie scoring the decisive goal in the last minute, sealing a league and cup double in the club's centenary year.