Taking up the revolutionary cause, Wilson published in 1774 "Considerations on the Nature and Extent of the Legislative Authority of the British Parliament." In this pamphlet, Wilson argued that the Parliament had no authority to pass laws for the American colonies because the colonies had no representation in Parliament. It presented his views that all power derived from the people. Though considered by scholars on par with the seminal works of Thomas Jefferson and John Adams of the same year, it was actually penned in 1768, perhaps the first cogent argument to be formulated against British dominance. He was a federalist.

In 1775 he was commissioned Colonel of the 4th Cumberland County Battalion and rose to the rank of Brigadier General of the Pennsylvania State Militia.

As a member of the Continental Congress in 1776, James Wilson was a firm advocate for independence. Believing it was his duty to follow the wishes of his constituents, Wilson refused to vote until he had caucused his district. Only after he received more feedback did he vote for independence. While serving in the Congress, Wilson was clearly among the leaders in the formation of Native American policy. "If the positions he held and the frequency with which he appeared on committees concerned with Indian affairs are an index, he was until his departure from Congress in 1777 the most active and influential single delegate in laying down the general outline that governed the relations of Congress with the border tribes.”

Wilson also served from June 1776 on the Committee on Spies, along with John Adams, Thomas Jefferson, John Rutledge, and Robert Livingston. They together defined treason.

On October 4, 1779 the Fort Wilson Riot began. After the British had abandoned Philadelphia, James Wilson successfully defended at trial 23 people from property seizure and exile by the radical government of Pennsylvania. A mob whipped up by liquor and the writings and speeches of Joseph Reed, President of Pennsylvania's Supreme Executive Council, marched on Congressman Wilson's home at Third and Walnut Streets. Wilson and 35 of his colleagues barricaded themselves in his home, later nicknamed Fort Wilson. In the fighting that ensued, six died, and 17 to 19 were wounded. The city's soldiers, the First Troop Philadelphia City Cavalry and Baylor's 3rd Continental Light Dragoons, eventually intervened and rescued Wilson and his colleagues. The rioters were pardoned and released by Joseph Reed.

In 1779 Wilson accepted the role of Advocate General for France in America. He held this post until 1783.

One of the most prominent lawyers of his time, Wilson is credited for being the most learned of the Framers of the Constitution. A fellow delegate in the Constitutional Convention of 1787 in Philadelphia made the following assessment of James Wilson: "Government seems to have been his peculiar study, all the political institutions of the world he knows in detail, and can trace the causes and effects of every revolution from the earliest stages of the Grecian commonwealth down to the present time."

Wilson's most lasting impact on the country came as member of the Committee of Detail, which produced the first draft of the United States Constitution in 1787 (a year after the death of his wife). He wanted senators and the president to be popularly elected. He also proposed the Three-Fifths Compromise at the convention, which made slaves count as three-fifths of a person for representation in the House and Electoral College. Along with James Madison, he was perhaps the best versed of the framers in the study of political economy. He understood clearly the central problem of dual sovereignty (nation and state) and held a vision of an almost limitless future for the United States. Wilson addressed the Convention one hundred-sixty-eight times. A witness to Wilson’s performance during the convention, Dr. Benjamin Rush, called Wilson’s mind “one blaze of light.”

Though not in agreement with all parts of the final, necessarily compromised, Constitution, Wilson stumped hard for its adoption, leading Pennsylvania, at its ratifying convention, to become the second state (behind Delaware) to accept the document. His October 6, 1787 speech in the State House Yard has been seen as particularly important in setting the terms of the ratification debate, both locally and nationally. In particular, it focused on the fact that there would be a popularly elected national government for the first time. Wilson was later instrumental in the redrafting of the 1776 Pennsylvania State constitution, leading the group in favor of a new constitution, and entering into an agreement with William Findley (leader of the Constitutionalist Party) that limited the partisan feeling that had previously characterized Pennsylvanian politics.

He was nominated to be a Justice of the United States Supreme Court by George Washington on September 24, 1789, after the court was implemented under the Judiciary Act of 1789. He was confirmed by the United States Senate on September 26, 1789, and received commission on September 29, 1789. Only nine cases were heard by the court from his appointment in 1789 until his death in 1798.

He became the first professor of law at the College of Philadelphia in 1790 — only the second at any academic institution in the United States — in which he mostly ignored the practical matters of legal training. Like many of his educated contemporaries, he viewed the academic study of law as a branch of a general cultured education, rather than solely as a prelude to a profession.

Wilson broke off his first course of law lectures in April 1791 to attend to his duties as Supreme Court justice on circuit. He appears to have begun a second year course in late 1791 or in early 1792 (by which time the College of Philadelphia had been merged into the University of Pennsylvania), but at some unrecorded point the lectures stopped again and were never resumed. They were not published (except for the first) until after his death, in an edition produced by his son, Bird Wilson, in 1804. The University of Pennsylvania Law School in Philadelphia officially traces its foundation to Wilson's lectures.

Wilson's final years were marked by financial failures. He assumed heavy debts investing in land that became liabilities with the onset of the Panic of 1796 - 1797. Of note was the failure in Pennsylvania with Theophilus Cazenove. Wilson was briefly imprisoned for a small debt in Burlington, New Jersey. His son paid the debt, but Wilson went to North Carolina to escape other creditors. He was again briefly imprisoned, but continued his duties on the Federal judicial circuit. In 1798, he suffered a bout of malaria and then died of a stroke at the age of 55, while visiting a friend in Edenton, North Carolina. He was buried in the Johnston burial ground on a plantation near Edenton, but was reinterred in 1906 at Christ Churchyard, located in Philadelphia.

“Tracing over the events of Wilson’s life, we are impressed by the lucid quality of his mind. With this went a restless energy and insatiable ambition, an almost frightening vitality that turned with undiminished energy and enthusiasm to new tasks and new ventures. Yet, when all has been said, the inner man remains, despite our probings, an enigma.” – Charles Page Smith, James Wilson: Founding Father, 1956

In the lectures mentioned above, James Wilson, among the first of American legal philosophers, worked through in more detail some of the thinking suggested in the opinions issuing at that time from the Supreme Court. He felt, in fact, compelled to begin by spending some time in arguing out the justification of the appropriateness of his undertaking a course of lectures. But he assures his students that: "When I deliver my sentiments from this chair, they shall be my honest sentiments: when I deliver them from the bench, they shall be nothing more. In both places I shall make ― because I mean to support ― the claim to integrity: in neither shall I make ― because, in neither, can I support ― the claim to infallibility."

With this, he raises the most important question of the era: having acted upon revolutionary principles in setting up the new country, "Why should we not teach our children those principles, upon which we ourselves have thought and acted? Ought we to instil into their tender minds a theory, especially if unfounded, which is contradictory to our own practice, built on the most solid foundation? Why should we reduce them to the cruel dilemma of condemning, either those principles which they have been taught to believe, or those persons whom they have been taught to revere?" (First lecture.)

That this is no mere academic question is revealed with a cursory review of any number of early Supreme Court opinions. Perhaps it is best here to quote the opening of Justice Wilson's opinion in Chisholm v. State of Georgia, 2 U.S. 419 (1793), one of the most momentous decisions in American history: "This is a case of uncommon magnitude. One of the parties to it is a State; certainly respectable, claiming to be sovereign. The question to be determined is, whether this State, so respectable, and whose claim soars so high, is amenable to the jurisdiction of the Supreme Court of the United States? This question, important in itself, will depend on others, more important still; and, may, perhaps, be ultimately resolved into one, no less radical than this 'do the people of the United States form a Nation?'"

In order to arrive at an answer to this question, one that would provide the foundation for the United States of America, Wilson knew that legal thinkers had to resolve in their minds clearly the question of the difference between "the principles of the constitutions and governments and laws of the United States, and the republics, of which they are formed" and the "constitution and government and laws of England." He made it quite clear that he thought the American items to be "materially better." (First lecture.)