After a finishing 2006 11–2 and in contention for the national championship game, many were expecting the Wolverines to build on their success, earning a national preseason ranking of No. 5.
On March 25, Coach Lloyd Carr announced that TE Carson Butler, DE Eugene Germany, and DB Chris Richards had been dismissed for violations of team policy.
Carr also had stated that WR Adrian Arrington had been suspended for the spring practice session due to a violation of team policy. Carr was uncertain about Arrington's future at Michigan but Arrington did play WR at Michigan for the 2007 season.
In the 34–32 loss, Michigan became the second team ever ranked in the AP Top 25 to lose to a Division I FCS team. Michigan started out strong, finishing the first quarter 14–7, but the Mountaineers scored 21 unanswered points to go up 28–14 just before halftime. After trailing 28–14 in the first half, Michigan recaptured a 32–31 lead thanks to three Appalachian State turnovers and a dazzling 54-yard touchdown run by senior running back Mike Hart with 4:36 left in the game.
However, after the teams traded possessions, the Mountaineers drove 69 yards in 11 plays, and Julian Rauch connected on a 24-yard field goal with 26 seconds remaining in the contest to give ASU a 34–32 lead. After a failed pass attempt, Chad Henne connected with Mario Manningham on a Hail Mary Pass with under 15 seconds left to get Michigan to the 20-yard line. Michigan had a chip shot 30-yard field goal to give Michigan what looked like to be their escape from the upset. Then, shocking the College Football world, Appalachian State's Corey Lynch blocked a potential game winning field goal with 6 seconds left to seal the huge upset. The attendance for the game was 109,218. Adding insult to injury, Michigan dropped out of the Top 25 in the next poll. This was first time in the history of the AP Poll that a team ranked in the Top 5 had fallen out of the poll as a result of a single game and the first time a ranked FBS team was defeated by a FCS opponent.
Michigan looked to recover from their stunning loss the App State in their next game against Oregon. Michigan took a 7–0 lead in the first quarter but then Dennis Dixon and the high-powered Oregon offense went to town on the struggling Michigan Defense, giving Michigan its worst home loss ever. The Michigan fans booed the Wolverines on their home field and people were calling for Head Coach Lloyd Carr's head. The loss was another embarrassment to the football program at the University of Michigan. In addition to the huge defeat, Michigan lost its senior QB Chad Henne to a knee injury for two games due to a play in the second quarter. ESPN reported, "A week after getting stunned by Appalachian State, the Wolverines were handed their worst beating since before Bo Schembechler worked the sideline at the Big House. Dennis Dixon accounted for 368 yards and a career-high four touchdowns, helping the Ducks build a 25-point lead at halftime and cruise to an easy victory." The 32-point defeat was Michigan's worst loss since losing 50–14 at Ohio State in 1968 and their second-worst home loss ever, dating back to a 40-0 loss to Minnesota in 1935. The Wolverines started 0–2 for the first time since 1998 and the first time starting 0–2 on a homestead since 1959 but in a positive note, both those times Michigan rebounded back and won the Big Ten title. "
The Wolverines and The Fighting Irish met for the first time with both teams boasting an 0–2 record. Since both teams lost their final two games of the 2006 season, the loser of this game would have a five game losing streak. Head coach Lloyd Carr faced many challenges, including the loss of his senior quarterback Chad Henne to a leg injury, fans calling for his firing, and his senior running back Mike Hart guaranteed a victory over the Irish.
Michigan won 38–0, tying their largest-ever win over Notre Dame set during the 2003 season. For only the second time in school history, Notre Dame opened the season with three losses.
In the 2007 Big Ten Season opener the unranked Michigan Wolverines defeated No. 10 Penn State 14–9. Sr. Running Back Mike Hart had 44 carries 153 yards and a TD. In his second start freshmen QB Ryan Mallett was 16–29 passes and a rushing TD.
The Michigan football team went on the first road game of the season defeating the Wildcats 28–16. Henne returned to the lineup to complete 18–27 passes and 3 TDs. Mike Hart had 106 yards and a TD. The Wolverines forced a turnover on the last 4 of the Wildcat possessions.
Despite a slow start and two early turnovers, the Wolverines extended their win streak to seven without Chad Henne or Mike Hart. After a Minnesota field goal, Minnesota's Dominique Barber recovered one of Ryan Mallet's three fumbles and returned it for a touchdown. Despite that, the Wolverines held the Gophers to just 231 yards and 3 offensive points all game. Michigan's Brandon Minor and Carlos Brown both ran for over 100 yards, meaning up until this game Michigan has had a back go over 100 yards in every match up. Mario Manningham had his fourth straight 100+ yard game.
Carson Butler 5-yard pass from Chad Henne (K.C. Lopata kick)
Jehuu Caulcrick 1-yard run (Brett Swenson kick)
Kellen Davis 5-yard pass from Brian Hoyer (Brett Swenson kick)
Jehuu Caulcrick 1-yard run (Brett Swenson kick)
Greg Mathews 14-yard pass from Chad Henne (K.C. Lopata kick)
Mario Manningham 31-yard pass from Chad Henne (K.C. Lopata kick)
Led by Chad Henne and his four touchdown tosses, Michigan defeated Michigan State 28–24. In the final minutes with Michigan trailing by a field goal, the team decided to turn it on. On a 3rd and 12, Michigan desperately needed a first down. Henne, with 3 touchdown passes thus far, threw the ball deep into the endzone giving Mario Manningham a leap ball touchdown putting Michigan up 28–24. On defense, the Wolverines got it done. Mixing up coverages, they sacked Michigan State for an 8 yard loss, the total yardage of the drive. The Wolverines got the ball back and finished off the game with a pair of Quarterback kneels.
Andre Caldwell 14-yard pass from Tim Tebow (Joey Ijjas kick)
K.C. Lopata 37-yard field goal
Percy Harvin 10-yard run (Joey Ijjas kick)
Adrian Arrington 18-yard pass from Chad Henne (K.C. Lopata kick)
K.C. Lopata 41-yard field goal
Chad Henne and Adrian Arrington set single-game career highs for passing and receiving yards, with 373 and 153, respectively, to lead the Wolverines to a 41–35 victory over the 12th-ranked Gators. The Wolverine defense managed to contain Heisman Trophy winning quarterback Tim Tebow with constant pressure and blitzing for most of the game, holding him to 154 passing yards and 57 rushing yards. Tebow did score 4 touchdowns however. The Wolverines overcame 4 turnovers, including 2 fumbles by Mike Hart, and a late 35–31 deficit to win their first bowl game in 4 seasons and the final game of Lloyd Carr's career.
Mike Hart set the following school rushing records: career carries (1015), eclipsing Anthony Thomas' seven-year-old record of 924 and still standing; career yards (5040), also eclipsing Thomas' seven-year-old record of 4472 and still standing; career yards per game (117.2), surpassing Billy Taylor's 102.4 set in 1971 and still standing; career 100-yard games (28), passing Thomas' 22 set in 2000 and still standing; career 150-yard games (12), surpassing Thomas' 9 set in 2000 and still standing; career 200-yard games (5), extending his own record set in 2005 and still standing.Mario Manningham established the school record for consecutive 100-yard reception games with six, surpassing Braylon Edwards' record of 4.Chad Henne broke several of John Navarre's career records established in 2003: attempts (1387), completions (828), yards (9715), touchdown passes (87), and 150-yard passing games (38). Henne also broke Rick Leach's career record for interceptions of 35 set in 1978 with 37.