Following his retirement as a player McCarthy immediately became involved in team management when he was appointed coach of the St. Finbarr's senior hurling team in 1980. It was a successful season as a 1–9 to 2–4 defeat of Glen Rovers gave McCarthy his first county championship title as a coach. The Barr's later secured the Munster title following a narrow victory over Roscrea. McCarthy's side were subsequently defeated by a Ballyhale Shamrocks side featuring seven Fennelly brothers in the All-Ireland final.