Steve Paterson signed three players in the close season but none were to be major influences. Mike Newlands was injured and only played pre season. Martin Bavidge made his senior debut but spent most of the season at Forres on loan. Gary Farquhar was only in the team sporadically and spent some time mid-season on loan to Clachnacuddin.
The season started with the traditional series of friendly matches including a 2-2 draw at home to Aberdeen. Then it was down to the serious business of the League Cup. A 4-1 victory away to Queen of the South on August 1st set up a lucrative second round match against Aberdeen at Caledonian Stadium. A crowd of 5164 turned up on 8th August but it was over as a contest when Billy Dodds scored the first of his three goals in 17 seconds. Caley Thistle could not reply and eventually lost 3-0. With the demise of the League Championship Trophy (formerly the B&Q Cup) this was the last cup action until January. The league campaign started on 4th August at Firhill when ICT beat Partick Thistle 1-0 with a Barry Wilson 57th minute goal. A 2-1 home victory on 15th August against Livingston put ICT joint top of the league with Clyde. A 5-1 away victory at East Fife two weeks later put them clear at the top and they stayed there until 26th September and a bad 4-1 defeat by Clyde at Broadwood. Full back Richard Hastings received a bad knee injury in this game and was out until January. Hugh Robertson came on loan from Dundee from October to December. As the Division settled down it became a two horse race between ICT and Livingston with Clyde a distant third. A 3-2 victory at home against Partick produced a record for a competitive goal when Paul Sheerin scored in 1 minute 20 seconds. By the half-way stage Livingston were on top with a 5 point lead. Clyde were third, 8 points behind second placed Caley Thistle.
In the Tennents Scottish Cup Caley Thistle were given a bye into the second round but interest ended when league rivals Livingston won 2-1 at Caledonian Stadium on the 2nd January 1999. Livingston went on to beat Aberdeen in the third round . With Iain Stewart out with a long term injury Martin Glancy came on loan from Dumbarton and made his debut on 9th January. After a fee wrangle with Dumbarton he finally signed a full-time contract. In February the defence was strengthened by the signing of Bobby Mann fron Forfar. Caley Thistle were unbeaten in the league for the first two months of 1999 and this included beating Stirling 5-1 and Alloa 4-1. On 27th February the promotion race took a significant turn when ICT beat Livingston 2-1 to close the gap between second and first to 4 points. Charlie Christie passed a milestone on 13th March when he became the first player to make 150 appearances. On the 20th March ICT went to the top of the Division on goal difference after a 3-0 win at Forfar and the Inverness Cup was retained on 26th March with a 1-0 defeat of local rivals Ross County. On 3rd April promotion was achieved with a 3-0 home win against Clyde. This result also ensured that Livingston were promoted and the only issue was the Championship.
The Championship decider took place on 1st May at Almondvale. It could not have been scripted better with both teams on the same points with two games left. Over 2000 supporters travelled down the A9 to support Caley Thistle and the record 6013 crowd saw an amazing game. Livingston were 4-0 up after 22 minutes and it looked like a landslide. Caley Thistle clawed three back through McCulloch, Christie and Stewart and could have equalised. These three goals restored pride but Livingston took the points and effectively the Championship. They made sure the following week when they beat Forfar and Caley Thistle could only draw at home against Alloa. Caley Thistle finished the league campaign on 72 points, 5 behind Livingston.
It was the end of a memorable season and all at the Club could look forward to Division One.