Early career

Not yet retired, Derwall took up player-managing first in Switzerland with Biel-Bienne (1959–1961) and Schaffhausen (1961–1962).^[6] After completely retiring from playing, he became the new manager of Fortuna Düsseldorf. Derwall reached the cup final with Fortuna in 1962, losing to 1. FC Nürnberg 1–2 after extra time. Afterwards he became manager of the regional association of Saarland for six years. In 1965, he was also manager of 1. FC Saarbrücken, winning the 1964–65 Regionalliga Südwest and promoting Saarbrücken to the Bundesliga.

West Germany

In 1970, Derwall was appointed as successor to Udo Lattek as the West German national team's assistant coach under the legendary Helmut Schön. At the 1972 Summer Olympics, he was responsible for the West German team, taking it into the last eight.

Derwall served as Schön's assistant until after the 1978 FIFA World Cup. When Schön retired from managing, also in light of the achievements in the tournament, Derwall was chosen to take his place as head coach of West Germany. His major rivals for this appointment were his coaching staff colleague Erich Ribbeck and Helmut Benthaus, then manager with the reigning German champions VfB Stuttgart, who received no release from his contract.

Derwall's first major tournament as West Germany head coach was UEFA Euro 1980 in Italy, and under his guidance West Germany won the championship in impressive fashion, winning four out of their five games and finishing with the tournament's top scorer in Klaus Allofs. Confidence was high going into the 1982 FIFA World Cup in Spain. Derwall was heard to have said before the first match against Algeria, "If we don't beat Algeria I'll take the next train home!" As things turned out he didn't stick to his promise. After a shock 1–2 defeat by Algeria in the first match, Derwall's West Germany regained their composure and progressed all the way to the final after some tough matches, including the infamous 1–0 win over Austria ("The Shame of Gijón") and the more memorable semi-final against France, where the Germans came back from 1–3 down to tie 3–3 and win on penalties. In the final itself, Germany lost 3–1 to Italy. The stars of this side were Karl-Heinz Rummenigge and Paul Breitner.

Notwithstanding this setback, Derwall remained a highly regarded manager and West Germany were still counted among the favourites for UEFA Euro 1984, but their performance in France was not impressive and Derwall's team were eliminated in the first round. Public opinion in West Germany turned against Derwall rapidly. It reached an absolute low point when people would begin to yell angrily at Derwall had they spotted him in public. He in the end, of what amounted to a public campaign, was forced to resign his position, being replaced by the hitherto-untested Franz Beckenbauer who acted as team manager.

Galatasaray

Derwall then shocked observers by turning down several job offers in the Bundesliga in favour of accepting the manager's position at Turkish club Galatasaray. At the time, Turkish football was not well regarded in Europe, and Turkish clubs had never made any real impression on the international scene. The arrival of Derwall, an internationally respected and experienced manager, changed this perception, and his tenure at Galatasaray is often credited with having helped spark the revival in the fortunes of Turkish football.^[7] As well as winning one national championship and one Turkish Cup, Derwall's time in Istanbul also involved his introducing modern Western European training techniques and tactical ideas to the Turkish game. Therefore, he's regarded as the revolutionizer of Turkish football.^[8] Two of Turkey's most respected managers, Fatih Terim and Mustafa Denizli, both trained under Derwall during his time in Turkey, have been quick to praise Derwall's influence.

Derwall retired from managing with Galatasaray in 1987 after helping his club become league champions (for the first time since 1973); despite speculation that he might take over as head coach of the Turkey national team, he chose instead to return to Germany and enjoy his retirement, with the managerial position of the Turkey national team later went to Sepp Piontek, also a German and one of Derwall's students.^[9][10] He was happy to see that the spark he lit grew enormously, with Galatasaray reaching the semi-finals of the 1988–89 European Cup (predecessor of the UEFA Champions League) and winning both the UEFA Cup and UEFA Super Cup in 2000.

His work in Turkey was also considered a major contribution to German-Turkish relations and was honoured with an honorary doctorate of the University of Hacettepe in Ankara and the German Cross of Merit 1st Class (Bundesverdienstkreuz).

Manager

1. FC Saarbrücken

• Regionalliga Südwest: 1964–65

Galatasaray

• Süper Lig: 1986–87
• Turkish Cup: 1984–85
• Turkish Super Cup: 1987

West Germany

• UEFA European Championship: 1980
• FIFA World Cup runner-up: 1982