Confederation Canada
McDougall is considered a father of Canadian confederation as he attended all three Confederation conferences. Once the dominion formed, he was Minister of Public Works in the Macdonald government. As he had begun as Liberal and now served under Macdonald's Conservatives, he earned the nickname 'Wandering Willy'.
In the federal election of 1867 he was elected in the district of Lanark North, for the Liberal-Conservative party.
McDougall was appointed Lieutenant Governor of Rupert's Land and the North-Western Territory in 1869. The only practicable travel route at the time was through the United States with the permission of U.S. President Grant. However, when McDougall tried to enter Rupert's Land from the Dakota Territory down the Red River, he was turned back near the border by Louis Riel's troops before he could establish his authority at Fort Garry (now Winnipeg, Manitoba). Dispatches on microfiche at the Main Library of the City of Toronto include his request for 1,000 British troops to be sent on the authority of Queen Victoria. She responded that she would prefer a more amicable settlement of the jurisdiction issue. He returned to Ottawa, and campaigned against Manitoba becoming a province because of its very few inhabitants at that time. The area of Fort Garry was about 50 square miles (130 km2). He also continued to be an interim leader of the North-West provisional government from Ottawa until Adams George Archibald took over on May 10, 1870.
In the federal election of 1872, he ran again for the Liberal-Conservative party in Lanark North but was defeated. In 1875, he was elected to the Parliament of the Province of Ontario. He was an Independent-Liberal from June 1, 1875, until September 9, 1878, for the electoral district of Simcoe South.