After retiring as a player, Cavanagh coached and later managed Brentford. He coached at Nottingham Forest from 1966 until 1972. He then linked up with his former Preston teammate Tommy Docherty as a coach at Manchester United. During this time he worked with George Best, who notably bought him a white television for being late for training Cavanagh stayed at United when Docherty was sacked in 1977 and became assistant manager under Docherty's successor, Dave Sexton, but he left the club following Ron Atkinson's appointment in 1981. From 1976 to 1979 he was also Northern Ireland assistant manager to Danny Blanchflower. He later had a spell as coach at Newcastle United. Ahead of the 1983 season, Cavanagh was hired as manager of Rosenborg. In Norwegian, the terms coach and manager are used interchangeably. Cavanagh had previously done an excellent job as coach at Manchester United, but lacked abilities in team selection, tactics and inspiration. He used players in the wrong position, and instructed the ball to be kicked over the midfield, making it impossible to use the playmaker. He believed in breaking down the players and then building them up, and was unarguably good at the former. By the summer, his style was costing the club players: Knut Torbjørn Eggen transferred to Orkanger in the Fourth Division, while Øivind Husby transferred to Brøndby in Denmark. Cavanagh was fired in August, at which time the club was second-last in the league, and Nils Arne Eggen took over as manager for the rest of the season. The team finished on a seventh place. President Erling Meirik withdrew as a consequence of the hiring, stating that in the future, the club should hire people based on more than their reputation and that they should seek judicial assistance with the contract. In 1985, he became Martin Buchan's assistant at Burnley, and took over as manager when Buchan was sacked later that year. After leaving Burnley in 1986, he worked at the FA School of Excellence at Lilleshall until his retirement.
In 2002, Cavanagh was diagnosed with Alzheimer's disease and died in March 2007, aged 78. He was survived by his wife Doris; his five children, Lesley, Thomas, Deborah, Robert and Christine; and his four grandchildren, Alex, Eleanor, Faye and Mariella.
