The 1987–1988 season was the highest-scoring season of Bird's career. In Game 7 of the 1988 Eastern Conference semifinals against the Atlanta Hawks, Bird shot 9 of 10 from the floor in the fourth quarter, scoring 20 points in that quarter and lifting the Celtics to a series-clinching victory over Atlanta. Bird finished with 34 points. His effort helped to overcome a 47-point performance by Atlanta's Dominique Wilkins. Wilkins remarked, "The basket was like a well. I couldn't miss. He couldn't miss. And it went down to the last shot of the game. Who was going to make the last shot? That's the greatest game I've ever played in or seen played." The Celtics failed to reach the NBA Finals for the first time in five years, losing to the Pistons in six games during the Eastern Conference Finals.
Bird's 1988–89 season ended after six games when he had bone spurs surgically removed from both of his heels. He returned to the Celtics in 1989, but debilitating back problems and an aging Celtic roster prevented him from regaining his mid-1980s form. Nonetheless, during the final years of his career, Bird maintained his status as one of the premier players in the game. In his final three seasons with the Celtics, Bird averaged over 20 points, 9 rebounds and 7 assists per game, shot better than 45% from the field, and led the Celtics to playoff appearances.
After leading the Celtics to a 29–5 start to the 1990–91 season, Bird missed 22 games due to a compressed nerve root in his back, a condition that eventually led to his retirement. He had off-season surgery to remove a disc from his back, but his back problems continued and he missed 37 games during the 1991–92 season. During the 1992 Eastern Conference semi-finals against the Cleveland Cavaliers, Bird missed four of the seven games due to recurring back problems.
On August 18, 1992, Bird announced his retirement. Following Bird's departure, the Celtics promptly retired his jersey number 33.