The 1996-97 NBA season was the Nuggets' 21st season in the NBA and 30th season as a franchise. In the offseason, the Nuggets acquired Mark Jackson and Ricky Pierce from the Indiana Pacers while signing free agent Ervin Johnson. However, they got off to a slow start losing nine of their first 13 games as Bernie Bickerstaff was forced out as head coach and replaced by Dick Motta. Midway through the season, Jackson was traded back to the Indiana Pacers, while Pierce was dealt to the Charlotte Hornets. Meanwhile, the Nuggets signed free agent Kenny Smith, who won championships with the Houston Rockets. As the season drew, the Nuggets struggled and went on to lose 26 of their final 30 games finishing fifth in the Midwest Division with a 21–61 record. Despite injuries, LaPhonso Ellis led the team with a career high averaging 21.9 points per game.

Following the season, Antonio McDyess was traded to the Phoenix Suns, Dale Ellis was traded back to the Seattle SuperSonics, Johnson was dealt to the Milwaukee Bucks, Tom Hammonds signed as a free agent with the Minnesota Timberwolves and Smith retired.

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