Sbragia rejoined Sunderland's coaching staff in November 2007, and was appointed as caretaker manager following the departure of Roy Keane on 4 December 2008. He took charge of the team for their match against Manchester United, which was lost 1–0. This was followed up with a 4–0 victory over West Bromwich Albion and a 4–1 win at Hull City, although Sbragia remained coy over the possibility of taking over permanently. He was appointed as manager on a permanent basis on 27 December on an 18-month contract. On 24 May 2009, after guiding Sunderland to Premier League survival on the final day of the season, Sbragia resigned as manager of the club. He remained at Sunderland as chief scout, a post which he held until April 2011.