Ferguson was appointed by fellow northeasterner Bobby Robson into the coaching staff at Ipswich Town in 1970. He was coach of the Ipswich team than won the FA Youth Cup in 1973 and 1975, and as the reserve team coach he developed several young players including Terry Butcher and George Burley. While reserve team coach, he rejected the offer to manage Millwall. After Ipswich won the 1978 FA Cup Final, he replaced Cyril Lea as the first team coach, and the team went on to win the 1981 UEFA Cup Final.