The election was one of the closest presidential contests in American history, Woodrow Wilson defeating Hughes by an electoral vote of 277 to 254 and a popular vote of 9,129,606 to 8,538,221. The vote of California, which went to Wilson by less than 4,000 votes largely because of the disaffection of Hiram Johnson, decided the election. Hughes again devoted himself to his law practice. In 1921, President Warren Harding appointed him Secretary of State. He continued in this office under President Coolidge. Hughes prepared plans for the limitation of naval armaments at the Washington Conference (see naval conferences), directed negotiations for several important foreign treaties, and vastly increased the prestige of the U.S. Dept. of State. He was a member of the Permanent Court of Arbitration (1926-30) and a judge of the Permanent Court of International Justice (1928-30).

In 1930, Hughes was appointed chief justice of the United States by President Hoover; he retired in 1941. As chief justice, Hughes generally held a moderately conservative position, and was often a swing vote on a court divided between conservative and liberal factions. The Hughes court helped develop the modern notion of freedom of speech through such decisions as Near v. Minnesota (1931), which largely voided all laws permitting prior restraint of press publication. More often than not, he voted to uphold controversial legislation of President Franklin Delano Roosevelt's New Deal, though in Schechter Poultry Corp. v. United States (1935), he wrote the opinion that found the act that created the National Recovery Administration to be unconstitutional. He vigorously opposed Roosevelt's unsuccessful effort to reorganize the Supreme Court in 1937.