The early stages of the season were promising, with the U's featuring in mid-table, but a drop in form leading into December saw them enter the relegation zone from which they would never emerge.
They never recovered from selling their midfield and defensive assets, despite owner and now chairman Robbie Cowling freeing up funds for manager Geraint Williams in January.
It was a farewell season to the club's aging Layer Road ground as they were to move to the purpose-built Colchester Community Stadium in the summer of 2008.
Ahead of Colchester's largely unexpected second season in the Championship, their star performers Wayne Brown, Jamie Cureton, Richard Garcia, and Chris Iwelumo all left the club citing a "lack of ambition" as their reason for wanting to leave.
Cureton left for Norwich City for £750,000, prompting manager Geraint Williams to break the club's record transfer fee twice on the same day by signing Mark Yeates from Tottenham Hotspur and then spending £300,000 on Milton Keynes Dons' forward Clive Platt.
There was a brief turnaround in form in January and early February, but a ten game run without a win including five consecutive defeats left the writing on the wall for the U's.