In 1971, Marvel Comics editor-in-chief Stan Lee was approached by the United States Department of Health, Education, and Welfare to do a comic book story about drug abuse. Lee agreed and wrote a three-part Spider-Man story portraying drug use as dangerous and unglamorous. However, the industry's self-censorship board, the Comics Code Authority, refused to approve the story because of the presence of narcotics, deeming the context of the story irrelevant. Lee, with Goodman's approval, published the story regardless in The Amazing Spider-Man #96-98 (May-July 1971), without CCA approval. The storyline was well-received and the CCA's argument for denying its approval was criticized as counterproductive. The Code was subsequently revised the same year.

Goodman retired as publisher in 1972 and was succeeded by Lee, who stepped aside from running day-to-day operations at Marvel. A series of new editors-in-chief oversaw the company during another slow time for the industry. Once again, Marvel attempted to diversify, and with the updating of the Comics Code achieved moderate success with titles themed to horror (Tomb of Dracula), martial arts, (Shang-Chi: Master of Kung Fu), sword-and-sorcery (Conan the Barbarian, Red Sonja), satire (Howard the Duck) and science fiction ("Killraven" in Amazing Adventures). Some of these were published in larger-sized black-and-white magazines, targeted for mature readers. Marvel was able to capitalize on its successful superhero comics of the previous decade by acquiring a new newsstand distributor and greatly expanding its comics line. Marvel pulled ahead of rival DC Comics in 1972, during a time when the price and format of the standard newsstand comic were in flux. Goodman increase the price and size of Marvel's November 1971 cover-dated comics from 15 cents for 36 pages total to 25 cents for 52 pages. DC followed suit, but Marvel the following month dropped its comics to 20 cents for 36 pages, offering a lower-priced product with a higher distributor discount.

In 1973, Perfect Film and Chemical Corporation changed its name to Cadence Industries, which in turn renamed Magazine Management Co. as Marvel Comics Group. Goodman, now completely disconnected from Marvel, created a new company called Atlas/Seaboard Comics in 1974, reviving Marvel's old Atlas name, but this project lasted only a year-and-a-half.

In the mid-1970s, Marvel was affected by a decline of the newsstand distribution network. Cult hits such as Howard the Duck were the victims of the distribution problems, with some titles reporting low sales when in fact they were being resold at a later date in the first specialty comic-book stores. An attempt by Marvel to buy DC was frustrated by DC's refusal to sell its entire library of characters (wanting to retain control of Superman and Batman), and DC was later folded into Warner Communications by owner Kinney National Company.

By the end of the decade, Marvel's fortunes were reviving, thanks to the rise of direct market distribution (selling through those same comics-specialty stores instead of newsstands) and the sales increase of previously borderline books — such as the canceled '60s title The Uncanny X-Men, revived to become a hit series under the team of writer Chris Claremont and artist John Byrne, or the more naturalistic, urban-crime superhero comic Daredevil, by writer/artist Frank Miller.