This paper examines the effects of two specific contextual factors: environmental velocity and decline speed, and timing of response on a firm’s turnaround performance. We conducted a 12-year longitudinal study on a sample of U.S.-based, publicly traded firms that experienced a significant decline in performance. We find that environmental velocity impacts the swiftness and nature of the response to performance decline, and that, in turn, affects turnaround outcomes. Firms in high-velocity environments undergo rapid declines and are more likely to undertake a retrenchment strategy. Speed in implementing a retrenchment strategy is linked to turnaround for firms experiencing rapid declines. These results further our knowledge of the nature of the multifaceted association between the nature of change in the environment, managerial action, and performance outcomes. One of the few longitudinal studies to include both industry- and firm-level variables in advancing interpretations of strategic turnarounds.