He recently served as Canadian Ambassador to the United States from 2005 to 2006. He served as Premier of New Brunswick from 1987 to 1997. He is currently Deputy Chairman of the Toronto-Dominion Bank.

McKenna's term in office was viewed mostly as a success. His key priority throughout his term was job creation and he was known to say that the "best social program we have is a job." He encouraged small business growth and tried to entice large companies to invest in the province with tax incentives. Another of his strategies was to raise the collective self confidence of New Brunswickers, which he believed would increase productivity. He introduced a sophisticated public relations operation which included the use of controversial video news releases. He was criticized for increasing the number of communications personnel on the government payroll but countered this complaint by pointing out that the primary government communications agency, Communications New Brunswick, had been depoliticized. Communications New Brunswick had been responsible to the Premier's chief of staff in past governments and McKenna made it report to the head of the civil service. He was also criticized for creating a toll free telephone number to the premier's office which had the number 1-800-MCKENNA, the number was functional throughout North America and was used for both New Brunswick constituents and business interests that were considering moving to the province.

Believing ten years was long enough for a premier to hold office, and having pledged to serve such a term when first elected, McKenna resigned in 1997 - 10 years to the day of the 1987 election.

McKenna was mentioned as a possible Ambassador to the US to succeed Michael Kergin after Paul Martin took power. Speculation increased after John Manley turned down Prime Minister Martin's offer. Many in the press commented on McKenna's business connections being an asset, notably as a member of the Carlyle Group and his friendship with former President George H. W. Bush.

McKenna presents his credentials as ambassador to U.S. President George W. Bush on March 8, 2005.  On January 5, 2005, Prime Minister Paul Martin's office confirmed that McKenna would be the 21st Ambassador to the United States. On January 14, the posting was formally announced and would be effective on March 1. McKenna became the Ambassador on March 8 when U.S. President George W. Bush accepted his credentials.

On February 22, 2005, McKenna told reporters Canada was already a part of the U.S. National Missile Defense (NMD) (or Ballistic Missile Defense (BMD)) program through an amendment to the NORAD agreement made on August 5, 2004, which granted U.S. access to NORAD's missile warning systems explicitly for use in NMD. However, Martin contradicted this two days later when he announced that Canada would not formally participate in the NMD program but focus on other items of shared defence/security interest. While Canadian defence minister Bill Graham said McKenna was simply misunderstood (as the NORAD agreement and missile defence are separate), this initial contradiction was interpreted by others as evidence of characteristic indecision by the Martin government and was seen to somewhat hamper McKenna's credibility.

Since becoming Ambassador, McKenna has attracted more media attention than most of his recent predecessors on both sides of the border. In the U.S. his message has been one of dispelling common urban legends and misconceptions about Canada, while in Canada he has urged Canadians to be more understanding of the American people and culture, particularly following what he argues is their understandable sensitivity after the September 11, 2001 attacks. Canadian pundits have given high praise for the former but some criticism for the latter.

Since leaving politics in 1997, McKenna served for a brief time on the Security Intelligence Review Committee. He has been touted several times as a potential Atlantic Canadian minister in the cabinets of Jean Chr�tien and Paul Martin. He expressed some interest in running in the 2004 federal election but announced he would not do so because of the lack of an available riding in the Moncton, New Brunswick, area. He did not want to push aside any incumbent Liberal member of Parliament.

After resigning the premiership of New Brunswick, McKenna was identified as a potential future leader of the Liberal Party of Canada, and Prime Minister of Canada. A poll released on August 23, 2005, commissioned by the Toronto Star, showed that McKenna was the top choice of the public to succeed Prime Minister Paul Martin. Among the general public, McKenna beat former NDP Ontario Premier Bob Rae by a margin of 23 to 11 while among self-identified Liberals, McKenna beat former Deputy Prime Minister of Canada John Manley by a margin of 28 to 13. The October 2005 issue of Saturday Night magazine had pollster Darrell Bricker and Liberal strategist Warren Kinsella create odds for potential Liberal leadership candidates. They made McKenna the favourite with 7 to 2 odds beating Scott Brison (8 to 1), Martin Cauchon (10 to 1), Michael Ignatieff and John Manley (each 15 to 1) among others.

On January 30, 2006, McKenna confirmed earlier reports that he was not running for the Liberal leadership to replace Paul Martin, who announced his resignation as party leader on the January 23, 2006 election night. McKenna acknowledged the strength of the Liberal brand stating: "You've got pretty good odds of being the prime minister if you're leader of the Liberal party." - every leader of the Liberal party since Sir Wilfrid Laurier in 1896 has been prime minister. However, he put an end to his involvement in the 2006 Liberal Party leadership race, explaining his decision by saying that he did not want "his life to become consumed by politics." and that: "I reminded myself of my vow upon leaving office that, having escaped the trap, I wouldn't go back for the cheese."

On April 6 2006, McKenna was named Deputy Chairman of the Toronto-Dominion Bank with his term beginning on May 1.  He will be serving the investment banking arm TD Securities. Although McKenna has held several non-executive corporate directorships prior to becoming Ambassador to the US, his role with TD is his first executive position in a major corporation.