After serving Grimsby Town as assistant manager, he returned to Southampton as the club's manager when Lawrie McMenemy resigned in June 1985. He kept the Saints in the First Division but despite having players of the calibre of Danny and Rod Wallace, Alan Shearer and Matthew Le Tissier in his squad, he tended to be too cautious. During his 6 seasons in charge, Saints were under-achievers and his best result was in 1989–90 with a finish in 7th place achieved largely thanks to 20 goals from Le Tissier and 18 from Rod Wallace, although they did reach the FA Cup semi-finals in 1986 and the same stage of the League Cup a year later. This was relatively good for a club of Southampton's size, and under Nicholl they finished higher in the league than a number of bigger clubs including Manchester United, Manchester City, Newcastle United and Chelsea, but under McMenemy they had won the FA Cup in 1976, finished league runners-up in 1984 and then fifth in his final season.