They started the 2004/2005 season in Football League Two, but gained promotion to Football League One after a startling comeback season. The Club was nearly relegated to the Conference National the season before. In the 2004/5 season they led Chelsea, the Premiership champions, 1–0, in the FA Cup 3rd Round, but were denied as they eventually went down 3–1.

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Prior the start of the 2005- 2006 season began, Scunthorpe were predicted to end up among the relegation battlers, having only been promoted to the division the previous season.

Pre season signings included ex-Stockport County captain Jim Goodwin and former Celtic striker Tommy Johnson. The Iron also offered permanent deals to utility man Richard Hinds and central midfielder Richie Ryan. Shortly after the season began, Scunthorpe signed teenage striker Billy Sharp from Sheffield United for £100,000. Scunthorpe lost Paul Hayes and Richard Kell to Barnsley during the summer due to the players being out of contract, although due to Hayes' age, an F.A. tribunal set a fee of up to £150,000 for him. Terry Barwick, Wayne Graves and Russell Penn were released by the club.

Scunthorpe United opened the campaign away at Brentford F.C., where they lost 2–0. However, after this early setback, things improved for The Iron, who at a couple of points early in the season occupied first place in the division. Their early season good performances hit a high with an away win to League One high-fliers Huddersfield Town by four goals to one. Teenage strike partnership Andy Keogh and Billy Sharp made a name for themselves at this time.

However, subsequently they slid down the league table somewhat. The club took Peter Till, a winger from Birmingham City and Michael Rose, a left-back from Yeovil Town on loan, though the previous has now returned to his club, as well as Neil MacKenzie, originally loaned from Macclesfield Town before the move was made permanent in the January transfer window.

The club finished in the third round of the FA Cup, beating Bury and Aldershot Town before losing 3–1 away to the Premier league's Manchester City after being 1–0 ahead.

In the 2005–06 campaign the club ended 12th in Coca-Cola League one with a record of P46 W15 D15 L16 F68 A73 Pts60 GD-5. Billy Sharp finished the season joint leading scorer of the season with 23 league goals, sharing the Golden Boot with Southend's Freddy Eastwood.