Gilligan returned to Salem State in 1975 to serve as head coach for his alma mater. Playing in ECAC Hockey's now defunct Division II league, Salem State became a powerhouse under Gilligan, winning at least 20 games in each of his six seasons behind the bench. Their best finish came in 1979 when they finished 4th in the NCAA Division II Men's Ice Hockey Championship. After the 1980-81 campaign Gilligan accepted an offer to serve as Tim Taylor's assistant at Yale. Two years later Taylor took a hiatus from the University to serve as an assistant for Team USA at the 1984 Winter Olympics, leaving the Bulldogs in the hands of Gilligan for the 1983–84 season. Gilligan acquitted himself by getting Yale to a 12-13-1 record and after the conclusion of the season was chosen to replace Jim Cross at Vermont