Long-serving coach Ronnie Moran was placed in temporary charge, with former captain Graeme Souness returning to Anfield as manager just before the Reds surrendered their defence of the league title to Arsenal.
The season was followed by a dramatic takeover deal by computer tycoon Alan Sugar, who took control of the club, cleared debts exceeding £20million, and installed manager Terry Venables as chief executive, although a fresh shadow hung over the club after star midfielder Paul Gascoigne was left facing a long spell on the sidelines after suffering a serious knee injury in the FA Cup final, following weeks of speculation that he was on the verge of a multi-million pound transfer to Lazio in Italy.
Everton sacked manager Colin Harvey at the end of October and brought Howard Kendall back to Goodison Park from Manchester City, who replaced him with 34-year-old midfielder Peter Reid as player-manager.
Aston Villa had lost manager Graham Taylor to the England team before the season began, and appointed Czech coach Jozef Venglos as his successor.
Chelsea manager Bobby Campbell stood down to take on a new role as personal assistant to chairman Ken Bates, and Ian Porterfield was named as his successor.
The final automatic promotion place was clinched by Sheffield Wednesday, who also won the Football League Cup to end their 56-year wait for a major trophy.
Teddy Sheringham found the net 38 times in the league for fifth-placed Millwall, but was unable to inspire victory in the playoffs, and was then sold to Nottingham Forest for £2.1million - a record fee for a Second Division player.
They were joined in relegation on the final day by West Bromwich Albion, who had already endured the misery of an FA Cup third round exit at the hands of non-league Woking, and were now facing Third Division football for the first time in their history.
Joe Royle’s cavalier Oldham Athletic side dramatically won the Second Division championship — an injury-time penalty completing a 3–2 come-from-behind win against Sheffield Wednesday in their final game, edging them the title from previous leaders West Ham United, who would be promoted as runners-up.
Jim Smith left Newcastle United in March after more than two years at the helm, making a swift return to management with Portsmouth as successor to Frank Burrows, while Ossie Ardiles was the new man in charge on Tyneside after leaving Swindon Town.
Colin Todd departed from Middlesbrough after their failure to succeed in the play-offs, being replaced by Lennie Lawrence who called time on nine years with Charlton Athletic, who appointed Alan Curbishley and Steve Gritt as joint player-managers.
Hartlepool United, another team who had endured a long run in the league's lowest tier, sealed promotion in third place, with coach Alan Murray taking charge for the final four months of the season due to manager Cyril Knowles becoming seriously ill, taking over on a permanent basis after the end of the season when Knowles declared himself unable to continue as manager.
The fourth promotion place went to Peterborough United, despite the Cambridgeshire club changing its manager twice of the course of the season, beginning with Mark Lawrenson in charge, before switching to Dave Booth in mid November and finally appointing Chris Turner in January.
Manager Cyril Knowles departed from Hartlepool on sick leave three months before their promotion, with player-coach Alan Murray overseeing the final stages of the campaign.