The season began disastrously as the club exited the UEFA Champions League and European football altogether, losing 2–1 on aggregate to Lithuanian side FBK Kaunas in the second qualifying round.

The financial consequences of the failures to qualify for the Champions League were revealed when the club posted a loss of £3.9m for the six months to December 2008, and in March decided to offer staff the option of voluntary redundancy as a way of cutting costs.

The player excess was eased slightly with the departures of Chris Burke, Jean-Claude Darcheville and a couple out on loan deals but the increased debt meant that the club needed to find a cash injection.

Despite a run of five wins from six matches following the Old Firm victory, the side trailed Celtic by seven points in the league at the turn of the year.

For the first few months of 2009 both sides dropped and gained points on the other and Rangers briefly took over top spot of the Scottish Premier League on 21 February after a win against Kilmarnock.

That is exactly what they got, goals from Kyle Lafferty, Pedro Mendes and Kris Boyd sealed a 3–0 win and the club's first league championship in four seasons.

The match was Walter Smith's first ever Old Firm final and was marred by a Kirk Broadfoot sending off deep into extra time for a foul on Aidan McGeady inside the penalty box.