His first managerial job was at Ayr United where he guided them to the 2001–02 League Cup final and the Scottish Cup semi-final in the same year. He was later sacked, however, having failed to get the club to the Scottish Premier League.
He later took over as manager at Junior team Glenafton, before leaving them to take over at Raith Rovers in 2004, with the club in financial difficulty. In September 2006, he was asked by the Raith Rovers board to take no active part in the running of the team, while they discussed the terms on which he may leave the club.
In May 2007, he returned to junior side Glenafton as manager, taking over from the departing former Partick Thistle boss Gerry Collins and in October 2016 was appointed as an advisor on footballing matters at Scottish League One club Airdrieonians. Dalziel was given the role of Director of Football at Airdrieonians on 31 October 2016, following the appointment of Mark Wilson as first team coach.[6][7] Dalziel took charge of the team after Wilson left in June 2017,[8] but the club had to appoint another coach, Willie Aitchison, due to his work for Radio Clyde.[9][10] Dalziel left Airdrie in January 2018, after the club was taken over by new owners.[11]