Martin Allen had joined Leicester from Milton Keynes Dons in May, but his refusal to sign Dutch striker Jimmy Floyd Hasselbaink, who had been invited for a medical by chairman Milan Mandarić but turned away by Allen, created friction between the two. The tension was only exacerbated when Allen refused to put in a bid for Celtic striker Derek Riordan. Eventually Martin Allen left Leicester by mutual consent on 29 August, after three months and four matches in charge, with Leicester in ninth place. Former West Bromwich Albion and Nottingham Forest manager Gary Megson was appointed as Allen's successor on 13 September, but left 41 days later, signing as Bolton Wanderers manager on 24 October, leaving Leicester 15th after nine league matches in charge.Ian Holloway, who had stabilised Plymouth Argyle in the Championship, was named Megson's successor on 22 November, but he was unable to revitalise Leicester and a 0-0 draw at Stoke City and with Southampton (who started the day in the relegation zone) beating Sheffield United on the final day of the season sealed Leicester's relegation to the third tier. Holloway left the club by mutual consent on 23 May.

Leicester City's last deal with kit supplier JJB Sports came to an end on 9 May 2007. It was announced on 30 May that Topps Tiles would be the kits sponsor in a two-year agreement. On 26 June it was announced the new kit would be produced by Jako and would be an all blue kit. The last time Leicester City wore an all-blue kit was during the promotion season of 2002–03.

Updated to games played on 4 May 2008.
Source: The Football League
Rules for classification: 1) points; 2) goal difference; 3) number of goals scored
(C) = Champion; (R) = Relegated; (P) = Promoted; (E) = Eliminated; (O) = Play-off winner; (A) = Advances to a further round.
Only applicable when the season is not finished:
(Q) = Qualified to the phase of tournament indicated; (TQ) = Qualified to tournament, but not yet to the particular phase indicated; (RQ) = Qualified to the relegation tournament indicated; (DQ) = Disqualified from tournament.

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