In July 1913 he was appointed Chief Staff Officer, Canada, the first to be appointed by the Dominion Government instead of by the British War Office. In 1916 he was given the temporary rank of major-general. He retired from the Army in 1920 and was allowed to retain the honorary rank of major-general. He then served as Inspector-General of the Canadian Air Force until 1922 with the rank of air vice-marshal. In this role he provided advice and guidance to Air Commodore Arthur Tylee, Air Officer Commanding the Canadian Air Force. In 1922 Gwatkin was promoted honorary lieutenant-general in the Canadian Militia Reserve of Officers.