World War II had caused a great expansion and diversification of Canadian industry, and also had brought the United States and Canada closer economically. After the war, Louis St. Laurent, who succeeded Mackenzie King as prime minister in 1948, pursued new economic ties with the United States, placing less emphasis on Canada's relationship with Britain.

In the postwar period, new petroleum fields and deposits of metallic ores were opened to development. Utilization of the vast waterpower resources of the west provided for further industrial expansion. The westward movement of the population—which had begun with the opening of the railways—continued to be important. Population growth was spurred by the immigration of nearly three million people, mainly from Britain and other European nations, in the two decades following World War II. During this period, major transportation projects were completed. The St. Lawrence Seaway, a joint venture of Canada and the United States, was opened to ocean shipping in 1959. In 1962 the first paved transcontinental highway—the Trans-Canada Highway—was completed.

Also in the postwar years, there was a growing sense of nationhood. To emphasize its national independence, Canada passed a citizenship act in 1946, creating a Canadian citizenship separate from that of British subject. In 1949 it dropped the word dominion from its name. In the same year, the Canadian parliament was given power by Britain to amend most of the fundamental laws that served as Canada's constitution, and Newfoundland became the 10th province. In 1952 Vincent Massey became the first Canadian to hold the post of governor general.

Canada's role in world affairs steadily increased in the postwar period. In 1945 Canada participated in the United Nations World Security Conference. In 1947 it was elected to a seat on the UN Security Council for two years. Lester B. Pearson, Canada's secretary of state for external affairs and later its prime minister, served as president of the UN General Assembly in 1952. Canadian influence in the United Nations was especially strong during the Suez Canal and Israel-Egypt crises of 1956–57.

Canada was one of the original members of the North Atlantic Treaty Organization. During the Korean War, 1950–53, it contributed sea, air, and land forces to the United Nations Command. The North American Air Defense Command was formed in 1957 to coordinate United States and Canadian forces.