In 1904, Bryan declined to seek his party's nomination, while former president Grover Cleveland endorsed Judge Alton Parker of New York, who bested publisher William Randolph Hearst to win the nod.  After Parker lost in a landslide to President Theodore Roosevelt, the judge announced that he would not seek elective office again.  Bryan promptly regained leadership of the Democratic Party and began steering it back from Parker's pro-business, pro-gold standard positions to the Commoner's populist, interventionist governing philosophy.

In September 1905, Bryan left the United States on a world tour of the Far East, Middle East, and Europe.  His absence proved beneficial to his presidential ambitions.  A trial balloon for Woodrow Wilson, president of Princeton University, deflated, and Hearst's views proved too radical for influential New York Democrats.  In early 1906, several Democratic state conventions endorsed Bryan's candidacy, to which he unconvincingly expressed surprise.  In order to garner conservative Democratic backing, Bryan tempered his rhetoric and called for a halt to the spread of socialism in America.  In a projected match against Roosevelt, many believed that Bryan would run to the progressive president's right.

When Bryan returned to the United States on August 30, 1906, Democratic politicians from across the country gathered at a reception in New York City to hail him as a conquering hero.  Bryan spoke for over an hour, delineating the issues upon which he would stand in 1908.  He denounced colonialism, argued for tariff reform, and emphasized anti-trust as the heart of his candidacy.  He finally acknowledged that the money question was finished.  His most controversial stance was government ownership of major railroad lines (interstate lines by the federal, and local feeder lines by the states).  It undermined support from conservative Democrats who had been warming to him, and provoked ridicule from Republicans (and, here, cartoonist Kemble).

In March 1907, Roosevelt publicly endorsed his secretary of war, William Howard Taft, as his successor.  At the Republican National Convention in June 1908, an overwhelming majority nominated Taft on the first ballot.  By the time of the Democratic National Convention in Denver a month later, Bryan exerted tight control over the party's delegations and platform (which did not mention government ownership).  After his name was placed in nomination, delegates demonstrated boisterously for a record 87 minutes.  John Kern of Indiana, a former state official, twice-unsuccessful candidate for governor, and future U.S. senator, was nominated for vice president.

As he had done in 1896 and 1900, in late summer and early fall of 1908, Bryan brought his message directly to the voters in three tours collectively taking him across the country.  Unlike the previous presidential campaigns, though, Bryan did not focus on one dominant issue (like silver or anti-imperialism, respectively), but spoke on many issues, which he had previously outlined.  Although Taft would prove to be more conservative in office than Roosevelt, the Republican nominee ran on the president's reform record and removed two issues from Bryan's quiver by endorsing a federal income tax and arguing that direct senatorial election was a non-partisan matter.

On November 3, 1908, Bryan went down to his third presidential defeat, losing to Taft 321-162 in the Electoral College.  Taft replicated McKinley's percentage win in 1900 by attracting 52% of the vote, but Bryan's lower total in 1908, 43% as opposed to 46% in 1900, reflected the 3% gained by the Socialist presidential nominee, Eugene Debs.