Nelles remained aboard the British cruiser until April 1917, when he was recalled to Ottawa, Ontario. There, he served as flag lieutenant to the first head of the RCN, Admiral Sir Charles Kingsmill. In 1920, Nelles entered the Royal Naval College, was promoted to lieutenant commander in 1922 and served in several Royal Navy establishments over the next two years before returning to Canada in 1925. In August 1925 Nelles returned to Canada and was promoted to commander and appointed senior naval officer, Esquimalt in December. He returned to the United Kingdom in 1929. On 18 March 1930 he was appointed executive officer aboard the recently refitted . In mid-1930 "Dragon" set off from HMD Bermuda on a three-month tour of South America's Atlantic and Pacific coasts. After having rounded Cape Horn her captain, L.H.B. Bevan, died unexpectedly. Nelles then assumed temporary command of "Dragon". After consultation with the Admiralty, Nelles was appointed acting captain and continued "Dragon"s tour, being the first RCN officer to command a Royal Navy vessel. Nelles returned to Canada in 1931, reverting to the rank of commander. Due to favourable reports by his British commanders after the "Dragon" cruise and his seniority among Canadian officers, the Chief of the Naval Staff, Commodore Walter Hose recommended Nelles to be his successor. In May, he was appointed to the command of the RCN's newest destroyer . He was also made Senior Officer of the Canadian Destroyer Flotilla, which comprised four destroyers. Nelles remained in the position until 1933, when he departed for the United Kingdom for a period at the Imperial Defence College. In 1933, Nelles was given command of HMCS "Stadacona", the RCN shore establishment at Halifax. The minimum rank for the position of Chief of Naval Staff was captain and Commodore Hose recommended Nelles for early promotion to the rank in 1931. However, due to financial constraints imposed by the government at the time, Hose was unable to get the promotion to go through. Nelles was eventually promoted to captain in January 1933 and was the first person in RCN history to be affirmed in the rank. Nelles was made acting Chief of the Naval Staff in December 1933 and in July 1934 was confirmed in the position and was promoted to commodore. Nelles was promoted to rear admiral in 1938. In 1940, Rear Admiral Percy W. Nelles, as Chief of the Naval Staff, led a group of Royal Naval College of Canada alumni who met with Angus Lewis Macdonald, then naval minister to discuss opening a college to train naval officers for the postwar navy and for civilian employment in the merchant marine.