Houston began the 2007-08 season with recently hired Rick Adelman as the team's 11th head coach. On June 14, the Rockets traded Juwan Howard to the Minnesota Timberwolves for Mike James and Justin Reed. In the 2007 NBA Draft, with the 26th pick, the Houston Rockets selected PG Aaron Brooks, from Oregon, traded with the SuperSonics to receive Pick #31 PF Carl Landry from Purdue, and with the 54th overall pick selected SG Brad Newley from Australia.

On July 12, guard Vassilis Spanoulis was traded to the San Antonio Spurs along with the rights for the 2009 second-round draft pick. In return, the Rockets received center Jackie Butler and the rights to Luis Scola, a 2002 second-round draft pick yet to play in the NBA. 24 hours after this deal was made, Scola came to a "Basic Agreement" which could see him playing for the Rockets next season. Less than a week later, Scola signed with the Rockets. Scola has performed well during the season, sharing minutes at the power forward position with current starting power forward Chuck Hayes. Scola has brought some much needed rebounding and inside presence that the Rockets desperately showed a lack of in their 2006 NBA Playoffs loss to the Utah Jazz,and he came at a very small price as the Rockets traded away seldolm-used Vassilis Spanoulis for him. Hopefully, Scola will be another piece of the puzzle that the Rockets are attempting to build so they can regain their elite championship stats from the 1990s.

On July 20 guard Steve Francis signed a 2 year deal with the Rockets, ten days after he accepted a buyout of the last two seasons of his $30 million contract with the Portland Trail Blazers. He is expected to compete for a starting job with Mike James and Rafer Alston. However, so far throughout the season, the point guard issues have been inconsistent and difficult to work with, because the Rockets have five point guards fighting for playing time. Francis actually did not play for the first several games of the season and many fans began to wonder if head coach Rick Adelman would ever play him and if bringing Francis back to Houston was the right move. However, Francis's playing time has steadily increased as the season has progressed, but knee injuries sidelined him again.

On September 7, it was also announced that the Rockets will debut a new court design for the 2007-08 season. The court design includes a lighter varnished wood inside the three point area, similar to the Seattle SuperSonics, while the rest are dark varnished wood. The color red will remain on the Rockets logo, and the script. This court design is similar to the Phoenix Suns, Cleveland Cavaliers and New Orleans Hornets, in which most of the hardwood is exposed. On March 16, the Rockets achieved a 22-game winning streak, setting a franchise record and notching the 2nd longest winning streak in NBA history. The last 10 games were won despite the absence of star center Yao Ming who suffered a season-ending foot injury. On March 18, the streak came to an end at the hands of the Boston Celtics with 94-74 loss. The Rockets finished their season 55-27. The Rockets were eliminated by the Utah Jazz in the first round of the playoffs, 4 games to 2, to end the Rockets 2007-2008 season.