The Redskins qualified for the playoffs in 2007, for the second time in 3 years, following the completion of a 9–7 regular season. They advanced as the sixth-seeded team in the NFC, and were defeated by the NFC West Division champions Seattle Seahawks in the first round of the playoffs.
Gibbs retired as head coach and president effective January 8, 2008 after completing four years of his five-year contract. His retirement came three days after a first round playoff loss to the Seattle Seahawks, which concluded the 2007–2008 season. The last game he coached at FedEx Field in Washington was on December 30, 2007; the Redskins had a key victory over the Dallas Cowboys to send Gibbs and the Redskins to the playoffs. He remained with the team as an adviser to team owner Daniel Snyder. During Gibbs' four-year return to the Redskins, the team qualified for the playoffs twice, once more than it qualified for the playoffs during his 11-year absence. He was succeeded as head coach by Jim Zorn.
Gibbs currently resides in Charlotte, North Carolina, with his wife, the former Patricia Escobar. They had two sons, J. D. Gibbs and Coy Gibbs, and eight grandchildren. J. D. and his wife, Melissa, had four sons: Jackson, Miller, Jason, and Taylor. Coy Gibbs and wife Heather have three sons Ty, Case, Jet, and daughter Elle. In January 2007, Gibbs revealed that Taylor was diagnosed with leukemia, adding that his grandson had undergone surgery and received chemotherapy treatments. Gibbs is a devout Christian. His son J.D. died on January 11, 2019 after a long battle with neurological brain disease diagnosed in 2015.