During the 1996–97 English football season, Liverpool F.C. competed in the FA Premier League (known as the FA Carling Premiership for sponsorship reasons).

Liverpool led the Premiership for much of the season, and established a five-point lead at the top before New Year's Day 1997. However, the team were overtaken by Manchester United in the latter stages of the season, and it was United who ultimately won the league, though Liverpool squandered several more chances to reclaim the top position. The side were marred both by the rise of the "Spice Boys" culture, as well as by defensive aberrations; dropping points at their previously impregnable Anfield home. A 2-1 home defeat against bottom of the table Coventry City denied Liverpool the chance to return to top spot with six games to go, United having lost at home to Derby the previous day. Indeed, a win over United at Anfield in April would have put Liverpool top with just three matches to go, but United won 3-1 to effectively clinch the title. The title lost, Liverpool still went into the final match of the season in second place with a two-point lead over Newcastle and Arsenal, but a 1-1 draw with Sheffield Wednesday meant they ended up finishing 4th on goal difference, thus missing out on a place in the newly expanded UEFA Champions League and leaving Roy Evans and his team with a UEFA Cup place as scant consolation for a season which had promised much and giving rise to the phrase "finishing fourth in a two horse race".

In the cups there was more disappointment. Liverpool's UEFA Cup Winners' Cup campaign ended in the semi-finals with a 3-2 aggregate defeat to Paris St Germain. In the FA Cup they lost 4-2 to eventual winners Chelsea in the fourth round, having led 2-0 at half-time and squandered chances to extend their lead. Liverpool were knocked out in the Coca-Cola Cup quarter-finals by eventual finalists Middlesbrough.

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