After 12 years of managing Oldham, Royle returned to Everton in November 1994 to succeed manager Mike Walker, who had been sacked after less than a year in charge following Everton's worst start to a league season, with no wins from their first 12 league games. He permanently signed Scottish striker Duncan Ferguson, who was at Everton on loan. Ferguson would go on to play a big part in Everton's success after Royle's arrival, and would remain loyal to the team after retiring as a player in 2005 (taking a position as a trainer at Everton and even having an interim spell as manager in the 2019–20 season when he took over as temporary manager for two games before the arrival of Carlo Ancelotti).