Liverpool 1986–91
After the 
Heysel Stadium disaster in 1985 and 
Joe Fagan's subsequent resignation as manager, Dalglish became 
player-manager of Liverpool and guided them to their first "
double" in his first season in charge in 
1985–86. Liverpool achieved this historic feat by winning the League Championship by two points over 
Everton (Dalglish scored the winner in a 1–0 victory over 
Chelsea at 
Stamford Bridge to secure the title on the final day of the season) and the FA Cup, again beating Everton 3–1 in the final.
The following season was trophy-less, but Liverpool topped the league for almost the whole season in 
1987–88, although Dalglish's appearances were becoming increasingly rare after he signed 
Peter Beardsley from Newcastle. Alongside Beardsley, he signed 
John Aldridge from 
Oxford United as a replacement for the outgoing Ian Rush, winger 
John Barnes from 
Watford and 
Oxford United midfielder 
Ray Houghton  The Liverpool side had a successful run of 37 matches unbeaten in all  competitions from the beginning of the season (29 in the league, 22 wins  and 7 draws). The run began on the 15 August 1987 and was ended by  Everton on 21 February 1988. Liverpool were crowned champions with four  games left to play, having suffered just two defeats from 40 games.  However, despite being favourites in the 
1988 FA Cup Final, they were denied a second double by underdogs 
Wimbledon.
Dalglish guided Liverpool to victory over Everton in the second  all-Merseyside F.A. Cup final in 1989, but lost the chance to win a  second double in the 
last minute of the 
final game of the season.
In the 
1989–90  season Liverpool won their third league title of their first five  seasons under Dalglish's management. It came after a late surge by Aston  Villa had knocked them off the top of the table in April, but a strong  run during the final weeks of the season saw Dalglish's side win the  title by nine points. 1989–90 was also the season that saw the  38-year-old Dalglish play the final game of his career, when he came on  as a 71st minute sub for 
Jan Mølby in Liverpool's final home game of the season against 
Derby County on 1 May 1990. Dalglish also received his third Manager of the Year award.
Dalglish was in charge of the club at the time of the 
Hillsborough disaster on 15 April 1989 at the beginning of the FA Cup semi-final against 
Nottingham Forest.  The tragedy claimed 94 lives on the day, with the final death toll  reaching 96. Dalglish won many admirers for his dignity during this  tragedy.
  He attended many of the funerals as did the other Liverpool players. He  is still well-regarded by Liverpool supporters for this reason, as well  as for his on-field successes. He resigned as manager of Liverpool (on  health grounds
[citation needed])  on 22 February 1991, just two days after a 4-4 draw with rivals Everton  in which Liverpool were pegged back four times. Stating he wished to  retire from football, Dalglish left Liverpool FC in 1991, with the club  defending their title and still in contention for both the league title  and the FA Cup
.
Dalglish's Liverpool record ended with: 515 appearances, 172 goals,  307 as manager, 8 League Championships, 2 FA Cup wins, 3 European Cup  wins, 4 League Cup wins, 1 European Super Cup win, and 5 Charity Shield  wins. He also won a 
Football Writers` Footballer of the Year award, a 
PFA player of the year award, and three Manager of the Year awards.
 Blackburn Rovers 1991–95
Dalglish stated that he was taking an extended break from football. When 
Sheffield Wednesday manager 
Ron Atkinson departed to 
Aston Villa  in June 1991, Dalglish was offered the job to manage Sheffield  Wednesday but rejected it as he felt unable to work at Hillsborough  after witnessing the tragedy there two years earlier.
 Dalglish surprised fans by returning to management in October 1991, with 
Second Division Blackburn Rovers, who he led into the 
Premier League by beating 
Leicester City 1–0 in the 
Second Division Play-off  final at Wembley. The resulting promotion meant that Blackburn were  back in the top flight of English football for the first time since  1966.
[31]
The club were owned by steel tycoon 
Jack Walker  who paid Dalglish very well, and also made large sums available to him,  thus allowing Blackburn to compete financially with the wealthiest and  biggest teams in England, such as 
Arsenal and 
Manchester United. In 1992, Dalglish signed 
Southampton's 
Alan Shearer for a British record fee of £3.5 million.
 Shearer helped Dalglish's newly promoted Rovers to fourth position in the first year of the new 
Premier League.  Despite Blackburn's wealth, Dalglish often found it hard to attract big  name players to the club, leading to great frustration on his part. The  failure to sign Roy Keane was one example: Dalglish and Keane had a  verbal agreement but Manchester United manager Alex Ferguson convinced  him to join his team instead. Keane recalled that Dalglish was furious  at him for the decision, and even threatened to sue.
The club finished two positions higher the following season, as  runners-up to Manchester United. United had peaked with a 16-point lead  over their nearest rivals by the new year, but Blackburn had drawn level  on points with United by early April after the leaders had dropped  points in several crucial games in early spring. However, Blackburn then  began to drop points as United recovered their form and United finished  champions by a seven-point margin.
By this time, Dalglish had added 
England internationals 
Tim Flowers and 
David Batty to his growing squad.
The 
1994–95 season saw Dalglish again break the transfer record, paying 
Norwich City £5 million for 
Chris Sutton  who along with Shearer formed a formidable striking partnership. He had  now spent over £27 million putting together a squad that could make a  serious challenge for the Premier League Championship. The challenge  came and by the last game of the season both Blackburn and Manchester  United were pushing for the title. Blackburn had to go to Dalglish's  former club, Liverpool, with United having to go to East London to face 
West Ham United at 
Boleyn Ground.  At the final whistle, Dalglish was able to celebrate: even though  Blackburn had lost the game 2–1, news that Manchester United had failed  to get the result they needed had filtered through to him via radios in  the crowd.
The title meant that Dalglish had been part of nine championship  winning sides and the title win also sent Dalglish into the record books  once again, being only the third manager in the history of the game to  lead two different clubs to top flight league championships, after 
Herbert Chapman and 
Brian Clough.
After winning the Premier League, Dalglish became Director of Football on 25 June 1995, with 
Ray Harford  taking over as Blackburn's manager. As the team's fortunes began to  slide – Blackburn could only finish 7th in the Premier League and were  knocked out of the Champions League in the first round – questions arose  about the precise nature of Dalglish's involvement with the club. He  parted company with Blackburn, by mutual consent, at the end of the  following season.
Newcastle United 1997–98
On 14 January 1997, Dalglish was appointed manager of 
Newcastle United, on a three-and-a-half-year contract, inheriting a squad of players reputed, by previous manager 
Kevin Keegan,  to be the best the club had ever had. From a starting point of fourth  place in the Premier League on the exit of Keegan, Dalglish guided the  club to a runner-up finish in May and a place in the new format of the  following season's 
UEFA Champions League. However, the 
1997–98  campaign only saw the team end up in 13th place, though Dalglish  achieved some notable successes during the season, including a 3–2 
UEFA Champions League win over 
Barcelona, and an FA Cup final appearance against Arsenal. Dalglish was sacked by 
Freddie Shepherd after two draws in the opening two games of the subsequent 
1998–1999 season, and replaced by former Chelsea manager 
Ruud Gullit.
Celtic 1999–2000
In June 1999 he was appointed Director of Football at Celtic, with  his former Liverpool signing John Barnes appointed as head coach.
 Barnes was sacked in February 2000 and Dalglish was appointed manager, and he guided them to the 
Scottish League Cup final where they beat 
Aberdeen  2–0 at Hampden Park, and he left the club shortly thereafter. Dalglish  was unhappy with the departure and Celtic's termination of his contract.  He had recommended previous manager Barnes to the club and offered  himself as a replacement manager should the young Barnes not succeed in  the role.
  In spite of the termination of his contract, Dalglish vowed to stay on  as Director of football. After a brief legal battle, Dalglish accepted  Celtic's settlement offer of £600,000.
 Return to Liverpool 2009–
 Club ambassador 2009–2011
In April 2009 Liverpool manager 
Rafael Benítez  approached Dalglish about the possibility of returning to his former  club, with a role in the club's youth academy. This appointment was  confirmed on 3 July 2009,
 and Dalglish was also made the club's ambassador.
When Benitez departed as manager on 3 June 2010, Dalglish was asked  to help the club find his replacement. Dalglish was then himself heavily  linked with the post, an idea that won strong support among former  players and fans. Speculation linking him to the post ended on 1 July  when 
Fulham's Roy Hodgson was appointed manager.
However, a poor start to the 
2010–11 season  led to Liverpool fans chanting for the return of Dalglish as manager as  early as 3 October 2010, when the Liverpool team suffered a 2–1 home  defeat by newly-promoted 
Blackpool, leaving them third from bottom in the Premier League after seven games.
 With no real improvement in Liverpool's fortunes throughout the month (during which time the club was taken over by 
New England Sports Ventures),
 calls for Dalglish to return as manager gathered pace.
Caretaker manager 2011–
After a continued run of poor results, Hodgson left Liverpool on 8  January 2011, and Dalglish was appointed caretaker manager of the club  until the end of the season.
 Dalglish's first game in charge was on 9 January 2011 away at 
Old Trafford against Manchester United in the 
3rd round of the FA Cup. Liverpool lost the game 1–0 due to a controversial penalty decision.
 Dalglish's first league game in charge was against 
Blackpool on 12 January 2011 in which Liverpool lost 2–1.
 After the game, Dalglish admitted that turning around the fortunes of the club would be a major challenge.
Shortly after his appointment, Dalglish indicated that he would like the job on a permanent basis if it was offered to him,
 and on 19 January the Liverpool chairman 
Tom Werner  indicated that the club's owners would favour the idea of Dalglish  taking the position full-time. Werner stated "He fits the criteria we  are looking for. He has been everything we could have hoped for."
     He's brought the club together as one. The players and the  supporters are all together. It wasn't like that at the start of the  season, unfortunately for Roy. But I think Kenny coming in has  galvanised the support behind the team again and obviously his record as  a manager in the past is fantastic. He's one of the top managers  around. He's won four championships.
“
”
 Jamie Carragher, speaking shortly after Dalglish's re-appointment as Liverpool manager
  On 22 January 2011, Dalglish led Liverpool to their first competitive win since his return as manager, against 
Wolves at 
Molineux,
 and on 26 January 2011 against Fulham he recorded his first home win since his return.
 After signing 
Andy Carroll from 
Newcastle for a British record transfer fee of £35 million and 
Luis Suárez from 
Ajax  for £22.8 million in the final few minutes of transfer deadline day on  31 January, in the wake of Fernando Torres's £50 million departure from  the club, journalists began writing that Dalglish had already cast off  the label of caretaker manager;
 shortly afterwards, club owner John Henry seemed to confirm this by  stating "It's still early but in retrospect you could not have made, in  our case it was very fortunate, but we could not have made a better  choice. I know he, for a long time now, has wanted to be in this  position, so it's a great thing for the club, for Kenny and for us."
 Following a dramatic 1–0 victory against Chelsea at 
Stamford Bridge on 6 February 2011, described by 
Alan Smith as "a quite brilliant display in terms of discipline and spirit",
 a "defensive masterplan" by 
David Pleat,
 Henry Winter  wrote: "Such is Liverpool's transformation under Dalglish, a  reinvigorated team now sixth, it can only be a matter of time before he  is confirmed as long-term manager".
  On 18 March 2011 formal talks began between the club's owners and  Dalglish about offering him the manager's position on a permanent basis.