The start of the 2020-21 basketball season saw McCaffery's Hawkeyes as the #5 ranked team in AP pre-season poll. The team returned every starter from a squad that finished 20-11 in a COVID-shortened 2019-20 season, including Naismith Player of the Year favorite Luka Garza. Garza would go on to win his second consecutive Big Ten Player of the Year, while also being named a consensus All-American for the second time. On March 15th, 2021, McCaffery signed a four-year contract extension to stay with the Hawkeyes through the 2027-2028 season. On March 22nd, McCaffery led Iowa to another Round of 32 blowout loss, despite returning over 95 percent of the scoring from the 2019-20 team.