The Washington Generals finally returned to the post season for the first time since their Hamilton days, thanks to a breakout year from Gerry Stokes. Ottawa and New York dominated the Eastern Conference, each winning their divisions with Ottawa just edging out Montreal during the last week of the season to take the Northeast. A new "battle of Ontario" emerged during the 1976-77 season. Toronto, known as "Canada's team" since the PHL's inception, had always had a strong rivalry with the Hamilton Kings. After the Kings' relocation to Washington, Racers fans turned their attention to the Beavers, who were quickly becoming contenders. The budding rivalry came to an explosive head on January 11, 1977, when Ottawa's Randy McCracken bumped Toronto goaltender Ralph Morello. The response from the Racers was swift as the Phil Morrison and Todd Beirness both grabbed a hold of McCracken, who held his own against both players. one month later, the teams met again in Toronto, where they engaged in a minor brawl when Ottawa's Derrick Rowe grabbed a hold of Phil Morrison on the bench after Morrison refused to fight him earlier. As the scrap turned into a full-scale brawl, even the fans began to get into it. Elsewhere in the Northeast Division, the Nova Scotia Claymores and Detroit Mustangs both suffered disastrous seasons, finishing with only 18 and 17 wins respectively. While the aging Claymores simply struggled to keep up with quickly improving competition in the Northeast Division, Detroit was racked with injury problems. Cliff Lyle took a hard hit during the World Hockey Challenge final and missed the first five games with a separated shoulder. When he returned against Quebec on October 16, he took another hard hit from Nationale defenseman Paul Ryan, this time knocking him out while separating his shoulder once again. Lyle would end up missing half of the season. Before he could return, winger Kirk Saunders went down for the year with back injury, while Bobby Vail suffered a severe concussion, missing the rest of the season as well.
In the Western Conference, the LA Wizards enjoyed a record-breaking season, winning 61 games while only losing 8. Stuart Holly set a new single-season scoring record with 82 goals, while Ray Fowler scored 58. Excitement surrounding the Wizards reached and all-time high as movie stars were seen nearly every night at the Inglewood Colosseum. Stuart Holly and Ray Fowler soon became two of Hollywood's hottest stars themselves with the dynamic duo even being featured on a soap opera at one point. The Wizards/Nuggets rivalry began to heat up. California proved to be LA's stiffest competition, as they were the only team to beat the Wizards more than once, defeating them three times while winning 49 games to take third place in the West. Guy Dupont, angry after losing the World Hockey Challenge, turned it into a career season, scoring 47 goals and leading Minnesota to another strong 118 point season, while in St. Louis, David Appleby nearly single-handedly led the Spirits to the playoffs for the second straight year. Appleby was quickly proving himself to be one of the top young players in the PHL and a future legend. Back in Toronto, legendary center Mark Benson announced he would retire at season's end after 21 seasons with the Racers. On the final night of the regular season, the Racers held Mark Benson Night, as the team announced they would retire Benson's number 15 the following season. It was a fitting way to end the regular season as a potentially very intriguing post season approached.