After crossing the Willamette River on the Ross Island Bridge, the Highway is locally known as Powell Boulevard through Portland and Gresham.

State maintenance ends at the Portland/Gresham border, beginning again where the Highway turns southeast at Burnside Street east of downtown Gresham.

Soon after that turn, Highway 26 uses the completed part of the Mount Hood Freeway (built only to surface expressway standards) to Sandy, where it runs through downtown on a one-way couplet.

When I-205 was built, the ramps at Powell Boulevard were configured to only allow traffic towards the west, with US 26 east pointed along the four-lane Division Street, about 1⁄2 mile (0.80 km) to the north.

Division Street runs east into Gresham, where it meets Burnside Road, at which a right turn to the southeast leads into the Mount Hood Highway and US 26.

Between 1955 and 1978, the 15-mile (24 km) segment of the route through southeast Portland was proposed to be moved from Powell Boulevard to a new similar alignment known as the Mount Hood Freeway.

It continues along U.S. Route 26 for about thirty miles, then leaves the highway proper in favor of the business loop through Government Camp.