Brian Clough became manager of Forest on the 6th of January, 1975. 12 weeks following the close of his 44-day stint as Leeds United's manager. Leeds United. Clough hired Jimmy Gordon to be his coach at the club, like Gordon was his trainer in his previous roles at Derby County and Leeds. Scottish center-forward Neil Martin scored the only goal in Clough's debut match as trainer, when he beat Tottenham Hotspur in an FA Cup third-round replay.
Ian Bowyer was already at Forest and had also won national and European trophy at Manchester City. Clough was signed by Scots pair John McGovern and John O'Hare in February. Both were in the Clough's Derby County 1971-72 Football League title victory. Clough signed Colin Barrett in March initially on loan. Clough introduced John Robertson and Martin O'Neill back into the fold following they made requests for transfer requests under Brown. Viv Anderson was a player who had played with the first team and was a regular player under Clough. A young Tony Woodcock was at Forest but was then rated unfavorably from Clough and was transferred for the club Lincoln City. Forest finished 13th on English football's second tier at the time Clough joined. They finished the season in 16th place. Forest was signed by Frank Clark in July of the season's closing as a free-transfer. The following season, Forest ended up finishing seventh in Clough's Football League first full season as the club's manager. This was the season that McGovern was elected the long-standing club captain, replacing the team that saw Bob "Sammy" Chapman as well as Liam O'Kane were both injured.
Peter Taylor on 16 July 1976, returned to Clough as his assistant manager as Clough had been prior to winning his league in Derby. Taylor was an assistant spotter at the club in the position. After reviewing the players, Taylor said to Clough "that was an achievement for you to be 8th within the Second Division because some of them are Third Division players". Taylor was critical of John Robertson for allowing himself to gain weight and become disillusioned. He put Robertson to eat a healthy program of diet and exercise which would allow him to achieve the status of an European Cup winner. Taylor transformed Woodcock from an reserve midfielder into an official 42-cap England striker. In September of 1976, he sold Peter Withe, a striker, to Forest for the price of PS43,000 before selling the player for Newcastle United for PS250,000 two years after. Withe was taken over in the first squad with Garry Birtles who Taylor had been scouting for the non-league club Long Eaton United. Birtles was also able to play for England. In October of 1976, Brian Clough acting on Peter Taylor's advice , signed Larry Lloyd for PS60,000 after an initial loan period.
Together, Clough and Taylor together, they took Forest to new levels. The first trophy won during the Clough and Taylor period is the 1976-77 Anglo-Scottish Cup. Forest defeated Orient 5-1 in aggregate during the two-legged semifinal that took place in December, 1976. Clough believed that winning the derided trophy as Forest's the first trophy of silver since. He added "Those who claimed it was nothing were certainly crackers. We'd been awarded something, and it was a huge difference."
On the 7th May 1977, the goal scored by Jon Moore's goal helped Forest in their final game in the league defeated Millwall by 1-0 on Millwall 1-0 at the City Ground. The result maintained Forest at the top of place at the top of the league, and dependent upon Bolton Wanderers dropping points in three games remaining in the race for third position. On May 14, Kenny Hibbitt's goal in his practice free kick routine along with Willie Carr gave Wolves a victory of 1-0 against Bolton. Bolton's loss reached the Forest team mid-air , en route to an end-of-season vacation in Mallorca. Forest's third-place advancement from 1976-1977 Football League Second Division was the fifth-lowest number of points scored by any team that was promoted in the history of football with 52 points (two points for a victory in England up to the year 1981).
Taylor has secretly followed Kenny Burns concluding Burns's reputation as gambler and drinker was exaggerated. Taylor approved his July deal of PS150,000. Burns was named FWA Footballer of the year in 1977-78 following his changed from centre-forward centre-back.Forest returned back to top of the league by winning 3-1 at Everton. Another three wins in league and cup came without scoring a goal. In the beginning of September, there were five goals conceded during a 3-0 loss at Arsenal and defeating Wolves 3-1 at home. Peter Shilton then signed for an all-time record price for a goalkeeper at PS325,000. Taylor stated: "Shilton wins you matches." Twenty-year old John Middleton was first team goalkeeper before Shilton. Middleton later during the month was in part exchange with PS25,000 Derby County for Archie Gemmill moving to Forest. Gemmill was a second Scottish ex-72 Derby title winner of the 1972 Derby title.
Forest were unable to win three of their first 16 league games, The last one was played at Leeds United on 19 November 1977. Forest lost only one more game during the entire season, that of 11 March, FA Cup sixth round defeat at West Bromwich Albion. Forest took home their 1977-1978 Football League seven-points ahead of runners-up Liverpool. Forest was one of the very few clubs (and one of the youngest team) to take home the First Division title the season after being promoted out of in the Second Division. This was what made Clough the fourth of four managers to take home the English league title with two clubs. Forest only conceded 24 times in their 42 league matches. They defeated Liverpool 1-1 during 1978's Football League Cup Final replay despite being tied for the cup Shilton, Gemmill and December signing David Needham not making it to the final. Chris Woods chalked up two clean sheets in the final, covering the absence of Shilton in his League Cup absence. McGovern was unable to play the replay due to injuries, so Burns won the trophy substitute captain. Robertson's penalty was Robertson's only goal in the game.
Forest started the season of 1978-79 by defeating Ipswich Town 5-0 for an FA Charity Shield record winning margin. The 1978-1979 European Cup they were drawn to face the trophy winners of the previous 2 seasons: Liverpool. Goals from home from Birtles and Barrett allowed Forest through 2-0 overall. The 26-year-old Barrett was afflicted with a severe injury to his leg a few days later in a match against Middlesbrough which ultimately ended his career two years after. The 9th December of 1978 was the day that Liverpool finished Forest's 42-match streak of league play that was unbeaten beginning in November the previous year. The streak of unbeaten games was equal to an entire season, which was more than that previous record, which was 35 matches played by Burnley in the 1920/21 season. The record stood until it was broken with Arsenal in August of 2004 just a month before the passing of Clough. Arsenal played in 49 league matches without losing.
The month of February was 1979 when Taylor approved the English football's initial PS1 million deal to sign Trevor Francis from Birmingham City. At the European Cup semi-final first leg at home, FC Koln was beaten by 1. FC Koln, Forest were two goals down in the 20th minute, but scored three goals to take the lead before Koln scored a goal back to begin in the German 2nd leg of the rule of away goals. The goal scored by Ian Bowyer in Germany allowed Forest through. Gunter Netzer later asked "Who are these McGovern? I've not heard of him, and yet he played his team." Forest defeated Malmo 1-1 in Munich's Olympiastadion in 1979's European Cup Final; Francis made his European debut scored with an angled header at the back of Robertson's cross. Forest defeated Southampton during the Final 3-1 to win the League Cup; Birtles scored twice, as did Woodcock one time. Forest was 2nd in 1978-1979 Football League, eight points ahead of Liverpool.
Forest did not want to participate in the away and home 1979 Intercontinental Cup against Paraguay's Club Olimpia. Forest beat F.C. Barcelona by 2-1 during The 1979 European Super Cup in January and February of 1980. Charlie George scoring the only goal during the first game, while Burns scored an equalizer in the second leg in Spain. In 1979-80, the Football League Cup Forest reached the third time in a row to win the final. A defensive squabble among Needham and Shilton allowed Wolves' Andy Gray tap into the net of an empty. Forest failed to take advantage of numerous chances but lost the game 1-0. The 1979-1980 European Cup quarter-final, Forest defeated 3-1 in Dinamo Berlin to overturn a loss of 1-0 at home. In the semi-final , they defeated Ajax by 2-1 in the aggregate. They defeated Hamburg by 1-0 at the time of the 1988 European Cup Final at Madrid's Santiago Bernabeu Stadium to retain the trophy. After twenty minutes Robertson scored, following exchange of passes with Birtles as well as Forest was able to defend the game. Forest placed 5th in 1979 and 1980 Football League.
The 1980/81 European Cup first round, Forest fell 2-0 to defeats of 1-0 at away and at home at home and away by CSKA Sofia. McGovern later claimed that the loss to CSKA reduced the confidence of the team because they had suffered defeat to less gifted opponents. Forest were eliminated from in the 1981 European Super Cup on away goals following a draw that was 2-2 in aggregate in the match against Valencia; Bowyer scored both Forest goals during the first leg at home. On the 11th of February, 1981 Forest was defeated 1-0 during the 1980 Intercontinental Cup against Uruguayan side, Club Nacional de Football. The game was played for the first time in the neutral stadium National Stadium in Tokyo before 62,000 spectators.
It was the case that the league, as well as European Cup winning squad was split up to maximize the value of selling players. Clough along with Taylor both later admitted that it was an mistake.The newly formed team of young players and signings like Ian Wallace, Raimondo Ponte and Justin Fashanu did not challenge for trophy wins. Taylor declared in 1982,
Since a few weeks, I'm not sure if I've done enough to the partnership, and I definitely haven't done justice for Nottingham Forest the way I thought I would. After a lot of amount of deliberation, I decided there was no other option. I was determined to take my retirement early. This is exactly what I've done.
John McGovern and Peter Shilton moved as did Jimmy Gordon retired in the same season.