The 2016–17 NIFL Championship was the first season of the second-tier Irish League since gaining senior status. The fixtures were announced on 7 July 2016. The season began on 13 August 2016 and concluded on 29 April 2017.
The 2016–17 NIFL Championship consisted of 12 teams. Ards were champions of Championship 1 in the previous season and were promoted to the 2016–17 NIFL Premiership. The next highest place team eligible for promotion, fifth-placed finishers Institute were defeated by Ballinamallard United in the Premiership play-off; therefore failing to achieve promotion.
The bottom two teams from the previous season, Lisburn Distillery and Donegal Celtic were relegated to the third-tier NIFL Premier Intermediate League; they were joined by Bangor after they failed to gain the Championship Licence, required for playing at second-tier level. They were replaced by PSNI, runners-up of the (now defunct) Championship 2 in the previous season; champions Limavady United were ineligible for promotion after failing to gain the required licence.