Nystrom continued to be an effective winger through the Islanders' Stanley Cup run, but by 1985, his rugged, aggressive play began to wear his body down. He played only 36 games in
1984–85, managing only two goals, though he matched that total in only ten postseason games. After playing sparingly through the first three months of the
1985–86 season, Nystrom was accidentally struck in the eye by a high stick from teammate
Gerald Diduck in practice on January 5. Unable to play due to the severity of the injury (he suffered two tears of the
retina, which nearly cost him his eye and later required surgery), he was thought to have retired, and he served as an assistant coach for the remainder of the season. Nystrom had played in 899 regular season games at the time. The Islanders' coach,
Al Arbour, who considered Nystrom one of his favorites, approached Nystrom prior to the Islanders' last home game of the 1985–86 season on April 5, and asked him if he would like to dress one more game, in order to make it an even 900 games played and to give Islanders fans a chance to say a proper good-bye. Nystrom accepted, and was added to the starting lineup. He took the opening face-off to a surprised and appreciative home crowd's roar. After skating around for about five seconds, he returned to the bench, never to play again. Nystrom remained an assistant coach the next two seasons, then served as radio analyst for the Islanders. He was named Islanders director of corporate affairs in 1988 and remained in that position through 1988–89 season, when he took a position as Islanders director of special projects in 1989 and remained in that position through 1990–91 season. He was named Islanders director of community relations in 1991 and director of amateur hockey development and alumni relations in 1992. In 1997 he added the title director of corporate relations and remained in that position through 2001–02 season. The Islanders retired his No. 23 on April 1, 1995, although three other players had worn it after Nystrom. In 2003, he was inducted into the Nassau County Sports Hall of Fame. He is also a member of the
National Jewish Sports Hall of Fame. He received the George Young Award, given to that individual, Jewish or non-Jewish, who has best exemplified the high ideals that George Young displayed, from the U.S.
National Jewish Sports Hall of Fame and Museum in 2003. ==Personal life==