In Parliament, where he was member for Westminster from 1763 to 1776, he had opposed the policy that led to the American War of Independence. However, he was sent to Boston in 1774 with the local rank of brigadier general, colonel of the 5th Regiment of Foot (later called the Northumberland Fusiliers).

When his brigade relieved Francis Smith's demoralized troops at Lexington, Percy carefully organized his forces so as to provide all-around protection. He also used his two 6-pounder field guns to break up large formations of American militia. Even so, William Heath, who led the colonials, managed to surround the retreating British column with fire during a grueling forced march. When the British found that the bridge over the Charles River in Cambridge was blocked, Percy turned his column down a side road and led them west to Charlestown.

He was absent from the field during the Battle of Bunker Hill, perhaps due to a quarrel with General Howe, a man with whom Percy could not get along. The following year, Percy commanded a division during the Battle of Long Island and led the storming of Fort Washington. By 1777, he had achieved the rank of lieutenant general, but grew so disgusted with the conduct of the war by General Howe that he resigned his command and left America in 1777 in part after a dispute over a quantity of hay.