After General Burnside was transferred to Virginia, Foster assumed command of the Department of North Carolina. He was promoted to major general of volunteers on July 18, 1862, and led the . During Confederate Lieutenant General James Longstreet's Tidewater Campaign, upon hearing of a planned Confederate attack on Washington, North Carolina, Foster personally assumed command of its defenses. When D. H. Hill demanded the surrender of Washington, Foster defiantly replied, "If you want Washington, come and get it." Hill's forces besieged the garrison and two Union relief expeditions were turned back. Foster escaped the besieged city in order to personally lead a relief column back. Hill withdrew his forces shortly afterward. Both Confederate and Union forces burned down much of the town. In December, Foster led the Goldsboro campaign won two minor battle at Kinston and Goldsboro against inferior confederate forces led by brigadier general Nathan G. Evans, resulting in the shutdown of the vital Confederate supply line of the Wilmington and Weldon Railroad for merely two weeks. After President Abraham Lincoln issued the Emancipation Proclamation freeing all slaves in rebel territory, in April 1863 Foster appointed Horace James, an experienced Congregational chaplain, as "Superintendent of Negro Affairs for the North Carolina District." To support the transition to freedom for former slaves, he was to develop a colony from the contraband camp that had developed on Roanoke Island. It became known as the Roanoke Island Freedmen's Colony (1863–1867). James also managed other camps for freedmen in the state, such as one at Trent River near his base at New Bern. Foster directed James to settle the people, give them farming tools and prepare them for a "free and independent community." By 1864, 2,200 freedmen lived on Roanoke Island, settled on individual household plots, and working for pay for the Army. James recruited teachers and founded several schools. A sawmill was built and a fisheries started. More than 150 freedmen from the island joined the nearly 4,000 from North Carolina who joined the United States Colored Troops. After the war, the Army dismantled the forts. Due to President Andrew Johnson's returning lands to Confederate landowners, the colony was abandoned. Most of the freedmen chose to be transported to the mainland, where they looked for work. By 1870, only 300 remained on the island. In December 1863, Foster was sent to Tennessee to assume command of the Department of the Ohio and its corresponding Army of the Ohio.