After Game 2 of the ALDS, Yankees owner George Steinbrenner said that if the Yankees lost the series, manager Joe Torre would not likely be brought back. Because of Steinbrenner's comments and the Yankees' third straight loss in the ALDS, Torre's status was uncertain as the off-season started. Eventually the Yankees offered Torre a new contract which cut his pay by $2 million, and offered one million for every round of the playoffs he made. Disliking the inclusion of incentives in the deal and unhappy with the pay cut, Torre rejected it, ending his tenure as manager of the Yankees. The Yankees then signed former catcher Joe Girardi to a three-year deal worth $7.5 million to manage the club.

The Yankees moved quickly to maintain several key players following the agreement with Girardi. After star third baseman Alex Rodriguez chose to opt out of the contract, seemingly ending his stay with the Yankees, he negotiated a new record-breaking deal with New York that will pay him at least $275 million over the next ten seasons. The Yankees also re-signed icons Mariano Rivera, Jorge Posada and Andy Pettitte. In December 2007, the Yankees signed LaTroy Hawkins and traded for Jonathan Albaladejo to bolster their bullpen and fill the hole left by the departed Luis Vizcaino.

The 2008 season will be the last season played at historic Yankee Stadium, after which the team will move to the New Yankee Stadium across the street. Because of this, the 2008 Major League Baseball All-Star Game will be played at Yankee Stadium.