The Cavaliers made many changes in the 2005 offseason. Under new owner Dan Gilbert (also the owner of Quicken Loans), the team hired a new coach, Mike Brown, and a new general manager, former Cavaliers forward Danny Ferry. The team experienced success on the court in the following season, clinching their first playoff appearance since 1998. After a first round win over the Washington Wizards, the Cavaliers rebounded from a 2–0 deficit in the second round against the Detroit Pistons, winning three consecutive games to come one game away from the conference finals. However, they lost a close Game 6 at home, and followed it with a 79–61 loss in Game 7. in game seven, the Cavs set two records for futility deciding playoff games: least points scored in a game (61) and in a half (23). The playoff rounds were a showcase for the emergence of LeBron James, who achieved many "youngest ever to..." records considering during the run.

The Cavs continued their success in the 2006-07 season. The team earned the second seed with a 50–32 record, generating a series of favorable matchups which included home court advantage in the first two rounds. The Cavaliers' first-round was a rematch with the 7th-seeded Wizards, who finished 41–41 and struggled with injuries down the stretch. The Cavaliers swept this series 4–0—the first sweep of a playoff series in franchise history—and faced the New Jersey Nets in the second round. The Cavs won the series 4–2 with James scoring 23 points and adding 8 rebounds and 8 assists in an 88–72 win in Game 6.

The Cavaliers faced the Pistons for the second straight playoff year, this time in the Eastern Conference Finals. After again losing the first two games at Detroit, the Cavaliers won the next three to take a 3–2 series lead. This year the Cavaliers eliminated Detroit in Game 6. The wins included a 109–107 double-overtime thriller at the Palace of Auburn Hills in Game 5, in which LeBron James scored the last 25 points for the Cavs, and his performance in this game is recognized as one of the best in NBA history. They continued to a dominant 98–82 win at home in Game 6. Rookie Daniel "Boobie" Gibson scored a career-high 31 points in the series clincher, and the franchise won its first ever Eastern Conference championship. The team's first trip to the NBA finals was a short one, as they were outmatched and outplayed by the very strong San Antonio Spurs, who swept the Cavs 4–0.

After struggling through an inconsistent 2007-08 regular season which saw the Cavaliers go 45–37, they met the Wizards in the first round of the playoffs for the third straight year. The Cavaliers jumped out to a three games to one lead, but failed to close out the series at home as James missed a potential game-winning layup at the end of the game. In game 6, James had a triple double and led the team to a 105–88 win and a 4–2 series win. They moved on to face the top-seeded Boston Celtics in the 2nd round. The Cavaliers lost the series 4–3 in a series that featured the home team winning all seven games. James scored 45 points in game 7, but it was not enough as Boston's Paul Pierce scored 41 points to lead the Celtics to victory.

The Cavaliers drafted J.J. Hickson 19th overall in the 2008 NBA Draft. They also acquired the rights to Darnell Jackson and Sasha Kaun who will play in Russia next season.