Led by 22-year-old center Dwight Howard, the Magic finished the season with a 52–30 record, finishing first-place in the Southeast Division and advancing to the Eastern Conference Semi-finals where they were eliminated by the Detroit Pistons in 5 games.
On June 5, the Magic released Donovan from his 5-year contract, under the condition that he would not be allowed to sign as head coach of another NBA team for five years.
The Magic made a splash in the free agent market by acquiring small forward Rashard Lewis on July 11.
A Chester, Pennsylvania, tugboat repairman by trade, the elder Nelson's death was ruled an accident.
In November 2007 the Magic traded Trevor Ariza to the Los Angeles Lakers for Maurice Evans and Brian Cook.