Following his retirement from the VFL at the end of 1985, in 1986 he moved to become the playing coach of Warrnambool in the Hampden Football League. He won four premierships with the club in just 5 seasons until 1990.
In 1994 he was an assistant coach at St Kilda under Stan Alves, before moving on to pursue various business ventures.
Thomas had a focus on man-management in his coaching style, as well as conducting practices towards the running of the club that are common in the business world. This new style of coaching has characterised by Thomas occasional use of jargon, such as "processes" and "outcomes" - although they are now terms almost universally used by all coaches.
Thomas coached St Kilda to consecutive preliminary finals in 2004 and 2005, plus a Wizard Cup Premiership in 2004.
While he initially came under fire for refusing to use the 'flood', Thomas slowly started to integrate the defensive coaching into his match-day approach, with improved results. Despite the criticism, Thomas maintained an impressive win-loss record against some of league's most highly rated coaches, including Malthouse, Pagan, Eade, Matthews, Wallace and Craig.
Thomas once said in an interview about the St Kilda Football Club: "This club is what I'm about." 
Thomas is only the 2nd coach to coach St Kilda to 3 straight finals series. The other coach to do so was St Kilda's 1966 premiership coach Allan Jeans.
On September 12th, 2006 the St. Kilda Football Club announced that Thomas would no longer coach the club as a 'mutual' agreement, however Thomas maintained that the club had asked him to leave by sacking him, and while he had accepted, it was not completely mutual.
The decision was a shock to the footballing world considering Thomas was only the second coach to lead the Saints to 3 consecutive finals series. It is not known why he was sacked, but many factors include the controversial match against Fremantle in Round 5, 2006 in which the Saints were stripped of two points following a hearing the following Wednesday, which ultimately cost them a top-four spot and the double chance, the long-term injuries to Justin Koschitzke, Aaron Hamill and Fergus Watts and starting the season with two interstate trips in four weeks.
Thomas has shown no interest in ever coaching another AFL club.
Thomas recently came under scrutiny after suggesting St. Kilda player Robert Harvey would not be able to perform at AFL level in 2008. Thomas has since eaten his words with Harvey averaging more than 22 disposals per game for the St. Kilda Football Club this season. Harvey is also arguably the favourite for the club's Best & Fairest award.
Thomas is now an expert commentator with Melbourne sports station SEN 1116.