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As the child of American refugees, who had himself lived six years in the United States, De Cosmos developed a sharpened sense of nationalism. This was expressed in a growing protectionist economic sentiment, and the belief that the colonies of British North America needed to be self-supporting, develop a distinct identity, and form a political and economic union. From such policies, emerged the two great causes of his later career: the union of Vancouver Island and British Columbia, and the merged Colony of British Columbia's entry into Confederation. To advance the first cause, De Cosmos left journalism and entered politics, becoming a member of the Legislative Assembly of Vancouver Island from 1863 until its union with the Colony of British Columbia in 1866. He advanced the second cause through his position as a member of the assembly of the merged, larger British Columbia from 1867-68 and 1870-71, and as the leading force (with Robert Beaven and John Robson) behind the colony's Confederation League. Through the instrumental role De Cosmos played in realizing these two goals, he earned for himself his reputation as British Columbia's Father of Confederation.

At the time of British Columbia's entry into Confederation on July 20, 1871, De Cosmos was the leading pro-Confederation figure in the new province. That year, he was elected to represent Victoria in both the provincial legislature and the House of Commons. Despite his prominence - or perhaps because of it - Lieutenant Governor Sir Joseph Trutch passed over De Cosmos for the job of Premier,[citation needed] instead asking John Foster McCreight to assume the position. Undoubtedly, De Cosmos' reputation as an iconoclast and his infamously volatile temperament did not endear him to the establishment.

McCreight resigned in 1872 on a motion of non-confidence, and on December 23, 1872, Trutch asked De Cosmos to form a new government as Premier. De Cosmos populated his cabinet with reformers, mostly born in North America, many of whom would come to dominate provincial politics for a generation. His government pursued an agenda of political reform, economic expansion, and the development of public institutions - especially schools. De Cosmos also focused on advancing the completion of the transcontinental railway promised under the Terms of Union. It was, however, De Cosmos' attempt to alter the Terms of Union in order to obtain monetary guarantees from the federal government to complete a dry dock at Esquimalt that eventually led to accusations of impropriety, and ended his provincial political career. He speculated heavily in land and in Texada Island Iron mines, which brought further criticism, as he was a public official. Thus he ended his tenure as Premier on February 9, 1874.

Despite this setback, De Cosmos continued to be re-elected as a Liberal Member of Parliament for Victoria City. Consistent with federal promises to place the terminus of the transcontinental railway in Victoria, in Ottawa, De Cosmos pushed for completion, especially the Vancouver Island portion. De Cosmos also became an opponent of land concessions to First Nations in the province, seeing it as a hindrance to British Columbia's economic growth and settlement by those of European descent. It is generally conceded that De Cosmos's tenure as a member of the dominion parliament was undistinguished. Circumstance betrayed him, and the belief of citizens of Victoria that future prosperity depended on the termination of the CPR at Esquimalt forced him into a one-dimensional role as critic of the terms of union. He found himself increasingly isolated as the railway issue alienated him even from other British Columbia MPs.