At the end of his term as congressman he returned to Boone County, and in October 1849 he accepted the position of Governor of the Territory of Oregon.

He received the appointment after the positions of territorial secretary and governor were declined by another Taylor supporter, Abraham Lincoln, whose term in Congress had also ended earlier that year.

During his tenure in June 1850 he became a member of an Indian Commission set up by the United States government to negotiate treaties with the Native American tribes west of the Cascade Mountains in the territory.

[3] However, Gaines and his fellow commissioners Alonzo A. Skinner and Beverly S. Allen were only able to get treaties signed that allowed the tribes to remain on the west side and in the foothills of the Willamette Valley.

These unpopular positions, coupled with fierce partisanship, cemented a perception that Gaines was an Easterner, out of touch with Pacific Coast needs and attitudes.

In 1853, Gaines left office, succeeded by the Democrat Joseph Lane, who assumed the reins of government for three days.

[5] In 1849 Gaines permitted her to marry Robert Garner, whose owner, James Marshall, occupied a neighboring plantation.

[8] Governor Gaines' appointment to the governorship indirectly lead to the death of several of his family, including his daughters Harriet and Florella, who died in 1850.

About 15 months after his wife's death, Gaines remarried, joining in matrimony with Margaret B. Wands, one of five schoolteachers recently sent to the state.