Reichel and the Flames resolved their impasse prior to the 1996–97 NHL season and agreed to a three-year, US$4.4 million contract. He struggled offensively in his return to Calgary, Reichel had only 16 goals and 43 points through 70 games with Calgary, and consequently became the subject of trade rumours. The Flames sent him to the New York Islanders on March 18, 1997, in exchange for Marty McInnis, Tyrone Garner and a sixth round selection in the 1997 NHL Entry Draft. In 12 games with the Islanders to finish the season, Reichel recorded 19 points and finished the year with 53 combined between the two teams.