Nelson played his last season in 1975–1976, and won his 5th NBA Championship as Boston defeated the Phoenix Suns in the 1976 NBA Finals 4–2. Nelson averaged 6.4 points and 2.4 rebounds in the regular season and 9.1 points and 2.9 rebounds in the playoffs.
Nelson began his coaching career as an assistant with the Milwaukee Bucks in 1976. After a 3–15 start to the season, Larry Costello resigned and Nelson was named Head Coach. A year later he became General Manager of the Bucks and soon began to show what would later become his signature style of wheeling and dealing players. Nelson made his first trade in 1977 by sending Swen Nater to the Buffalo Braves and turned the draft pick he received into Marques Johnson, who had a solid career with the Bucks. On November 25, 1977, the day after Thanksgiving, Nelson managed the greatest fourth-quarter comeback in NBA history. With Milwaukee down twenty-nine points to Atlanta, on the road, and with only 8:43 remaining, the Bucks went on a 35–4 run to win 117–115 in regulation. At the time, there was no three-point field goal.