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After a year's hiatus, Nelson then became Coach and Vice President of the Golden State Warriors, and was named NBA Coach of the Year a third time.

In Golden State, he instilled a run-and-gun style of offense.

Again using an unconventional lineup which featured three guards ( Mitch Richmond, Tim Hardaway and Sarunas Marciulionis ) and two forwards ( Chris Mullin and the 6 – 8 Rod Higgins at center ), Nelson led the Warriors to many winning seasons and playoff berths despite an under-sized lineup.

He continued to retool his lineup and drafted talent such as Chris Webber and Latrell Sprewell.

It was during this time that he reached the peak of his fame, due to his style of offense enabling Hardaway, Richmond, and Mullin ( also known as Run TMC ) to emerge as premier players.

After four winning seasons, he left Golden State following a prolonged public dispute with Webber and a 14 – 31 start.