20世纪早期，作为自治领的加拿大仍被英国控制着外交事务，所以当英国在一战对德宣战时加拿大也自动参战，被派往西方战线的加拿大志愿兵后来更组成加拿大军团。这支军队在维米岭战役和其它主要战役中都担当相当重要的角色。参与一战的650,000名加拿大人中，约60,000人战死，173,000人负伤。1917年，保守党总理罗伯特·莱尔德·博登对法裔魁北克人实行强制征兵，征兵危机爆发，而再加上对魁北克省以外的法语学校的争议，导致魁北克人的身份认同开始转变并令自由党发生内讧。之后在1917年罗伯特所领导的联合党赢出大选。 1919年，加拿大独立于英国加入国际联盟，随后的1931年威斯敏斯特法案更肯定加拿大的独立性。
1930年代的大萧条给加拿大经济带来沉重打击。为了应对大萧条，合作社联邦联合会在40年代至50年代于萨斯喀彻温省推出多项社会福利政策。二战期间，在自由党总理威廉·莱昂·麦肯齐·金带领之下加拿大对德宣战。第一支加拿大军队于1939年12月抵达英国。
加拿大军队参与许多重要战役，其中包括迪耶普战役、入侵意大利、诺曼底战役、霸王行动和斯海尔德河战役。在荷兰被德国占领期间，加拿大为流亡的荷兰王室提供庇护，之后加拿大更把荷兰从纳粹德国解放出来。二战期间，加拿大为该国军队以及英国、中华民国和苏联制造许多军事装备，使加拿大经济飞速发展。尽管在1944年魁北克再次爆发征兵危机，但在战后加拿大成为一个强大的经济体并拥有一支庞大的军队。
Because Britain still maintained control of Canada's foreign affairs under the Constitution Act, 1867, its declaration of war in 1914 automatically brought Canada into World War I. Volunteers sent to the Western Front later became part of the Canadian Corps, which played a substantial role in the Battle of Vimy Ridge and other major engagements of the war. Out of approximately 625,000 Canadians who served in World War I, some 60,000 were killed and another 172,000 were wounded. The Conscription Crisis of 1917 erupted when the Unionist Cabinet's proposal to augment the military's dwindling number of active members with conscription was met with vehement objections from French-speaking Quebecers. The Military Service Act brought in compulsory military service, though it, coupled with disputes over French language schools outside Quebec, deeply alienated Francophone Canadians and temporarily split the Liberal Party. In 1919, Canada joined the League of Nations independently of Britain, and the 1931 Statute of Westminster affirmed Canada's independence.
Crew of a Sherman-tank resting while parked
Canadian crew of a Sherman tank, south of Vaucelles, France, during the Battle of Normandy in June 1944
The Great Depression in Canada during the early 1930s saw an economic downturn, leading to hardship across the country. In response to the downturn, the Co-operative Commonwealth Federation (CCF) in Saskatchewan introduced many elements of a welfare state (as pioneered by Tommy Douglas) in the 1940s and 1950s. On the advice of Prime Minister William Lyon Mackenzie King, war with Germany was declared effective September 10, 1939, by King George VI, seven days after the United Kingdom. The delay underscored Canada's independence.
The first Canadian Army units arrived in Britain in December 1939. In all, over a million Canadians served in the armed forces during World War II and approximately 42,000 were killed and another 55,000 were wounded. Canadian troops played important roles in many key battles of the war, including the failed 1942 Dieppe Raid, the Allied invasion of Italy, the Normandy landings, the Battle of Normandy, and the Battle of the Scheldt in 1944. Canada provided asylum for the Dutch monarchy while that country was occupied and is credited by the Netherlands for major contributions to its liberation from Nazi Germany.
The Canadian economy boomed during the war as its industries manufactured military materiel for Canada, Britain, China, and the Soviet Union. Despite another Conscription Crisis in Quebec in 1944, Canada finished the war with a large army and strong economy.