199798The season started well. On 1st July Steve Paterson and most of the first team squad went full time and pre-season match results were generally good. These included a match at Wick which produced a record 32 second goal from Marco De-Barros and a two-game visit to the Western Isles. There was great excitement in the Coca-Cola Cup. Stenhousemuir were beaten 5-1 in the first round on 2nd August with Brian Thomson scoring a hat-trick. The second round a week later saw premier league Motherwell taken to a penalty decider after a 2-2 draw at Fir Park. Motherwell won the decider 4-1 but it was a great performance.

The Second Division campaign started badly with a series of draws and defeats by the odd goal. Despondent at the foot of Division 2 the first league win did not come until the 25th October - a resounding 5-1 score at East Fife. Things improved gradually and by Christmas, although second bottom, only 8 points separated them from Queen of the South who lay third.

The Scottish Cup was a welcome distraction from the strain of the league. In the first round Caley Thistle beat non-league Whitehill Welfare 3-1 in Inverness and in the second round they beat Queen's Park 2-0, also at home. In the league a 4-0 thumping of East Fife at home on the 27th December was followed by a 5-1 win against Clyde on the 16th January - results which lifted them out of the relegation zone for the first time.

The third round of the Cup brought non-league Annan Athletic to Inverness in January - the result was a record 8-1 win (despite Annan taking an early lead) and the prize of a Fourth Round match away against Dundee United. This led to two historic matches. At Tannadice Caley Thistle led Dundee United 1-0 for most of the game before United equalised 9 minutes from time. The replay saw cup fever in the town and a record 5821 crowd. 2-0 down with 5 minutes remaining it seemed all over despite a great performance and a saved penalty by Jim Calder. In 85 minutes Brian Thomson pulled one back and in the 91st minute Mark McCulloch hit a glorious volley to equalise. 18 minutes into extra time Dundee United scored to take the tie and a home match against Celtic. The finest night in the Club's short history.

It was back to the league campaign and the long grind to retain Second Division status. During the season the Premier clubs declared their intention to break away and form their own league - 10 teams to start with but a promise to increase this to 12. This left the other teams to decide their own set-up and many formats were mooted - two Divisions of 12 & 18 being the most common suggestions (or 18-12!). This caused great uncertainty - was there going to be promotion or relegation? In the end the present arrangement was left for 1998/1999. Caley Thistle bounced back and forward from a relegation slot for all of the second half of the season with the worst moment being a mid-week 3-1 defeat at Brechin - a night that everything seemed to go wrong. The tide turned and important wins against Clyde, Stenhousemuir and East Fife gave them a strong chance of avoiding the drop. They beat East Fife 1-0 on the 25th April and this lifted them to 6th place needing 2 points from 2 games to survive - assuming lower placed Clyde & Stenhousemuir won their last 2 games. Brechin were already down. On the second last Saturday of the season they beat Brechin 2-1 to ensure survival. The last Saturday (9th May) proved to be eventful as Caley Thistle beat Livingston 2-1 at Almondvale.. Livingston started the day at the top of the table with high hopes of taking the Championship. Caley Thistle took the lead in the 34th minute through Iain Stewart, Livvie equalised in 47 minutes then Paul Sheerin scored the winner 15 minutes from time direct from a free kick. In the end Clydebank and Stranraer both leapfrogged Livingston to gain promotion and they were devastated. Caley Thistle finished a very creditable 5th despite the ups and downs of the season.

Brian Thomson and Iain Stewart were joint top goal scorers in the Second Division and Richard Hastings gained a full Canadian international cap on 18th May - his 21st birthday. Caley Thistle retained the Inverness Cup and the reserve team won the North Caledonian League Championship.