He left office in 1911 to run (unsuccessfully) as a Republican for Mayor of Chicago. His campaign manager was Harold Ickes. Although he won the Republican primary by a very wide margin, he narrowly lost the general election to Carter Harrison Jr. Merriam and Ickes helped co-found the Illinois Progressive Party, and they supported Robert M. La Follette for president until Theodore Roosevelt defeated him for the Progressive Party nomination. He campaigned for former President Theodore Roosevelt under the "Bull Moose" ticket in 1912. He again served as an Alderman from 1913 to 1917, albeit as an Independent rather than a Republican. Merriam ran again for mayor in 1915, losing the Republican primary to William Hale "Big Bill" Thompson. In 1916, he established the Bureau of Public Efficiency, a private organization which helped establish many quasi-public corporations and organized the Chicago Park District. Merriam lost his bid for re-election as alderman after being defeated in the Republican primary by just five votes in 1917. He unsuccessfully ran again for mayor in 1919, losing the Republican primary to incumbent Thompson once more.
Charles E. Merriam was an advisor to several presidents, and had a lengthy career in federal service. In 1911, President William Howard Taft offered him a seat on the Commission on Economy and Efficiency, a body established under the authority of the Civil Appropriations Act of 1910 to study the administration of the executive branch, but Merriam declined. In 1917, President Woodrow Wilson asked him to serve on the newly formed Tariff Commission (now the United States International Trade Commission), but again he declined federal service.