General Varnum would resign his commission in 1779 to return to Rhode Island, where he took command of the state’s militia and resumed his law practice. In his four years of service in the Continental Army, he had participated in the Siege of Boston, the battles of Long Island, White Plains, Fort Mercer, and Rhode Island, and survived the winter at Valley Forge. He was twice elected to the Continental Congress in 1780 and 1787 (his brother, Joseph Bradley Varnum, would serve as the sixth Speaker of the U.S. House of Representatives and as a senator from Massachusetts).
After the war, he would be one of the original founders of the Society of Cincinnati, along with other prominent former Continental Army officers, including George Washington, Henry Knox, Nathanael Greene, and Alexander Hamilton.
As an Ohio Company founder, he was appointed in October 1787 as one of two federal judges for the Northwest Territory. He arrived in Marietta on June 5, 1788, and among his first tasks was to assist Governor Arthur St. Clair in drafting new laws for the territory. He died, however, in January 1789 at the young age of forty from consumption and was buried with full military honors in the old graveyard in Marietta just weeks before the new government was to be seated in New York under the recently ratified U.S. Constitution, and his old friend George Washington elected as its first president.