William McDougall joined the Great Coalition in 1864. He was active in various capacities in the creation of Confederation and attended the Charlottetown, Québec and London conferences.
In 1847, William McDougall began to practice law with a major firm in Toronto. It provided him with an income which enabled him to begin a career in journalism. He began in agricultural journalism, then branched out to political journalism in 1850 with the creation of the North American. This bi-weekly was the promotional vehicle of the Clear Grit reform movement, of which William McDougall and his close associates were supporters. His adventure in journalism led him to politics with his decision to support the Hincks-Morin coalition government in exchange for the nomination of two Clear Grit representatives in the Cabinet. In 1854, he decided to run for office and declared himself a candidate. In 1858 he finally won a seat in the Legislative Assembly of the Province of Canada. Having sold his newspapers, and no longer taking part in editing George Brown's Globe, William McDougall was free to devote himself to politics full-time.
In 1862, he entered the Cabinet of the Sandfield Macdonald-Sicotte government, and later the Sandfield Macdonald-Dorion government, as commissioner of Crown lands. He had always wanted to see Canada stretch to the west and thus to acquire the lands owned by the Hudson's Bay Company.
As a member of the Great Coalition he was present at the Charlottetown, Québec and London conferences leading to Confederation.
On July 1, 1867, he was named minister of public works in Sir John A. Macdonald's Cabinet. His first priority, as before, was to annex the North-Western Territory and Rupert's Land to Canada. In 1868, he travelled to London with George-Étienne Cartier to negotiate the transfer of these lands from the Hudson's Bay Company to Canada.
On September 28, 1869, Prime Minister Macdonald named William McDougall first lieutenant-governor of the Northwest Territories. A group of Métis, under orders from Louis Riel, prevented McDougall from entering the Territory. Shocked and humiliated, he returned to Ottawa, where, he opposed, in vain, the entry of Manitoba as a province into Confederation. In his mind, no major political power should be given to the new territory before it had a sufficiently large population.
For William McDougall, the 1870s and 1880s were marked by some political success and several electoral defeats. In 1876, he returned to practice law in Ottawa and, in 1881, turned down various political nominations. In 1890, he was promised a seat in the Senate but illness prevented him from fulfilling his duties.