Rangers played a total of 68 competitive matches during the 2007-08 season. It was Walter Smith's first full season at the club since 1997-98. The early season priority was qualification for the group stages of the Champions League and this was secured with hard-fought victories over FK Zeta and Red Star Belgrade.

Rangers were drawn in Group E with Barcelona, Lyon and Stuttgart. The group stage started well, with the first two matches resulting in victories, over Stuttgart and Lyon. A home draw with Barcelona left Rangers with seven points after three games, but the last three matches all resulted in defeat, meaning Rangers finished third in the group and entered the UEFA Cup. However, the European adventure continued for Rangers as they progressed to the semi-finals of the competition by beating Panathinaikos, Werder Bremen and Sporting Lisbon. They then reached the final with a penalty shootout victory against Fiorentina. They played Zenit Saint Petersburg, managed by formed Gers boss Dick Advocaat, in Manchester on 14 May. Rangers lost the match 2-0, with over 200,000 fans in the city to see the game.

On the domestic front, the race for the Scottish Premier League continued until the final matchday of the season. Both Celtic and Rangers were tied on 86 points going into their games (against Dundee United and Aberdeen respectively) on 22 May 2008, but Celtic were top of the table due to having a better goal difference of 57, six ahead of Rangers. This did not prove to be decisive, as Rangers surrendered their hopes of landing the championship with a 2-0 defeat away to the Dons, while Celtic beat Dundee United 1-0. The club had had a ten-point lead in late March, although their nearest rivals, Celtic, had games in hand at the time. However, being forced by the Scottish football authorities to play 4 competitive matches (including a UEFA Cup Final) in the last 8 days of the season proved just too great a hurdle for Rangers to overcome.

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