Horton was installed as player-manager at Hull City in June 1984 and led the club to promotion out of the Third Division in 1984–85. He was sacked in April 1988 and was appointed as Oxford United's assistant manager the following month. He succeeded Mark Lawrenson as Oxford manager in October of that year and managed to keep the club in the Second Division for five seasons despite a financial crisis caused by the death of owner Robert Maxwell. Horton was the surprise appointment as Manchester City manager in August 1993 and kept the club competitive in the First Division before being dismissed by new club chairman Francis Lee in May 1995. He took charge at Huddersfield Town the following month, but was sacked with the club bottom of the Second Division in October 1997. He returned to former club Brighton & Hove Albion as manager in February 1998, who were struggling near the foot of the Third Division and forced to play home games at Priestfield Stadium in Gillingham. He moved on to another former club, Port Vale, in January 1999. Vale were relegated out of the First Division in 2000, though Horton won his first trophy in management as they secured the Football League Trophy in 2001. He resigned in February 2004, following a change in ownership.