No doubt due to Prevost's influence, McDouall was appointed Commandant of the post on Mackinac Island. The island was an important American trading post on Lake Huron. It had been captured by the British and Indians by surprise early in the war, thereby inducing many more Indians to ally themselves with Britain. In 1813, the Americans had won the Battle of Lake Erie, which had isolated the island from supply via Lake Erie. McDouall and a party of soldiers from the Royal Newfoundland Fencibles, voyageurs and craftsmen journeyed north in the depths of winter from York, the provincial capital of Upper Canada, to the Nottawasaga River, where they constructed batteaux. When the river unfroze in the spring, they sailed and paddled the length of Georgian Bay and Lake Huron to reach Mackinac with vital supplies. McDouall took up his post as commandant and began improving the defences of the island. McDouall's responsibilities covered a very large geographical area. Shortly after his arrival, he learned that the Americans had captured the post of Prairie du Chien, threatening the allegiance of some of the Indians. He dispatched an expedition under William McKay which succeeded in recapturing Prairie du Chien, although it reduced his own strength. An American expedition for the recapture of Mackinac Island, consisting of five warships with 700 troops, appeared off the island on 26 July 1814. McDouall's defences withstood an American bombardment and in the Battle of Mackinac Island, Indians with some of McDouall's troops defeated an American landing and inflicted heavy loss. The Americans then attempted to starve out the garrison with a blockade, but in the Engagement on Lake Huron, the blockading vessels were captured, securing the British hold on the entire region for the remainder of the war. The War ended in 1815. McDouall publicly regretted that the Treaty of Ghent restored Mackinac Island to America. He remained commandant of the post on nearby Drummond Island, and of the remaining British forces in the area, until leaving for home in June 1816.
Later career
In spite of his record, McDouall never again saw active service, although he was appointed Companion of the Bath in February 1817 and was promoted colonel in July 1830 and major general in November, 1841. He spent the remainder of his life on half pay retirement in Stranraer. He never married and devoted much time and money to the Free Church of Scotland.