Like the previous four tropical or subtropical cyclones of the season, Danny had a non-tropical origin, after a trough spawned convection that entered the warm waters of the Gulf of Mexico.

Danny was guided northeast through the Gulf of Mexico by two high pressure areas, a rare occurrence in the middle of July.

After making landfall on the Gulf Coast, Danny tracked across the southeastern United States and ultimately affected parts of New England with rain and wind.

On July 13, a broad mid-tropospheric trough of low pressure over the southeastern United States helped to initiate an area of atmospheric convection over the lower Mississippi River Valley.

Based on the observations, it is estimated the system developed into Tropical Depression Four on July 16 while located about 150 mi (240 km) south of the southwestern Louisiana coastline.

On July 17, the rate of organization and development of deep convection increased considerably, and the depression strengthened into Tropical Storm Danny later that day.

Located between two high pressure systems, Danny continued its unusual July track to the northeast, and crossed over southeastern Louisiana near the Mississippi River Delta.

After stalling near the mouth of Mobile Bay on July 19, Hurricane Danny turned to the east, and made its final landfall near Mullet Point, Alabama later that day.

[4] Prior to the arrival of the hurricane, the governors of Mississippi and Alabama declared disaster emergencies, expecting a 9-foot (2.7 m) storm surge and up to 20 inches (500 mm) of rain at that time.

Furthermore, 130 boats were damaged or sunk at a large marina in Buras, Louisiana, due to the storm surge of over 4 feet (1.2 m), in a matter of minutes.

Negligible damage occurred elsewhere in the extreme southeastern portion of Louisiana, due to Danny being a small tropical cyclone and a minimal hurricane.

[11] An oil rig off the coast of Pascagoula was ripped from its moorings and collided with a tank that spilled 500 gallons (1,892 L) of fuel into the Bayou Casotte stream.

A storm surge of over 6.5 feet (2.0 m) occurred off Highway 182, midway between Gulf Shores and Fort Morgan, in addition to the rainfall.

Unusually, when the storm stalled off the coast of Alabama, prevailing northerly winds forced the water out of Mobile Bay, causing tides to be two feet (0.61 m) below normal.

[2][16] Despite its effects in the northern Gulf of Mexico, only one person was directly killed from the storm there; a man drowned off the coast when he fell off his sailboat near Fort Morgan, Alabama.

One indirect casualty also occurred in the area, when a man had a heart attack while trying to secure a boat off the Alabama coast during the storm.

[9] The majority of houses and businesses on Dauphin Island and buildings from the western shore of Mobile Bay, and from Fort Morgan east to Orange Beach, had roof damage$.

[8] A race in the NASCAR All Pro series at the Five Flags Speedway in Pensacola, Florida scheduled to be held on July 19 was postponed to September 13, 1997, due to Hurricane Danny.

[18] By the time Danny reached Georgia and the Carolinas, its potential impact had weakened, though it still managed to produce 8–12 inches (200–300 mm) of rain as it drifted through the western portions of the states.

[2] Also in North Carolina, tropical rains related to Danny caused a CSX train to derail from its trestle into Little Sugar Creek, spilling about 2,500 gallons (9,500 L) of diesel and therefore forcing a nearby public housing development to be evacuated.

No significant coastal flooding affected the region, although a storm shelter was opened on Nantucket Island to host a Boy Scout group camping there.

He ordered that federal aid be provided in assistance to state and local efforts to respond in the areas of Alabama impacted by wind and flooding damage.

By making the shorter tow times the required alternative, the EPA intended to minimize any sea turtle casualties as a result of trawlers being allowed to remove the TEDs.

[8] The high amount of rainfall caused by Danny helped to ease dry conditions in portions of the Mid-Atlantic, but not sufficiently to stop the drought from developing further in most areas from northern Virginia to southern New England.

[35] A study published in Social Behavior and Personality in 1998 surveyed respondents from the University of West Florida and businesses in Pensacola for the news media sources they relied on during Hurricane Danny.

[36] The extremely short distance of the eyewall of Hurricane Danny from a Doppler weather radar station in Mobile, Alabama and its slow landfall over the course of a day led to further study by meteorologists.

One conclusion of the study, published in 2000, included the need to sample the boundaries of an eyewall more to establish a better estimate of surface-level winds and the overall intensity of a storm.