Neidhart returned to the WWF on the April 28, 1997 episode of "Raw is War", and attacking Stone Cold Steve Austin and reuniting with Bret and Owen Hart as part of the new Hart Foundation, a stable of Canadian sympathizers, also including Davey Boy Smith and Brian Pillman. On July 6 at in Bret's hometown Calgary, The Hart Foundation defeated the American team of Stone Cold Steve Austin, Ken Shamrock, Goldust and The Legion of Doom. Neidhart was part of Team Canada at Survivor Series in Montreal, teaming with The British Bulldog, Doug Furnas and Philip Lafon defeated Team USA Vader, Goldust, "Marvelous" Marc Mero and the debut of "The Lethal Weapon" Steve Blackman (Bulldog was the sole survivor, Neidhart was pinned by Vader). After Bret and Davey Boy Smith left the WWF on bad terms because of the Montreal Screwjob at "Survivor Series". D-Generation X leader and WWF Champion Shawn Michaels offered Neidhart a spot in the group on the November 24 episode of "Raw Is War". Neidhart accepted, only for it to be revealed as a setup as the group assaulted Neidhart at the end of the show. The following week on the December 1 episode of "Raw is War", DX member Triple H defeated Neidhart. After the match, DX attacked Neidhart once again and spray-painted "WCW" on his back, and signifying him following Bret Hart to World Championship Wrestling. Sgt. Slaughter and Ken Shamrock saved him, before Slaughter and Shamrock attacked D-Generation X at the end of the show. His last match in WWF was when he defeated The Sultan at a house show on December 1. WWF announced that Neidhart was released from his WWF contract on December 2, 1997.