During this time he joined the "Opposition Clique", a faction of southern politicians in the Democratic Party who opposed secession and the reopening of the slave trade.

During this time he served on a House committee formed late in 1860 to solve the growing sectional feud between the North and South.

He chose not to run for re-election in 1860, but, on his return to Texas in 1861, won a special election to the State Senate.

In late 1862 President Abraham Lincoln named Hamilton the Military Governor of Texas with the rank of brigadier general of volunteers.

He spent the rest of the war holding this empty position in New Orleans after a Union attempt to capture South Texas failed in 1863.

Hamilton also faced problems such as Indian incursions, general lawlessness, and chaotic finances in the aftermath of the Civil War.

He spoke out in favor of black suffrage and in September 1866 organized the Southern Loyalists' Convention in Philadelphia, where he criticized President Johnson.