[34] He became chairman of the Committee on Public Lands and promoted the Land Act of 1800, which made it easier to buy Northwest Territory land in smaller tracts at a lower cost.[30] Freeholders were permitted to buy smaller lots with a down payment of only five percent, and this became an important factor in the Territory's rapid population growth.[35]
Harrison was also instrumental in arranging the division of the Territory into two sections.[30] The eastern section continued to be known as the Northwest Territory and consisted of Ohio and eastern Michigan; the western section was named the Indiana Territory and consisted of Indiana, Illinois, Wisconsin, a portion of western Michigan, and the eastern portion of Minnesota. The two new territories were formally established by law in 1800.[36]
On May 13, 1800, President John Adams appointed Harrison as the governor of the Indiana Territory, based on his ties to the west and his apparent neutral political stances.[37] He served in this capacity for twelve years.[38] His governorship was confirmed by the Senate and he resigned from Congress to become the first Indiana territorial governor in 1801.