In 1786 Collingwood returned to England, where, with the exception of a voyage to the West Indies, he remained until 1793. In that year, he was appointed captain of HMS Prince, the flagship of Rear Admiral George Bowyer in the Channel Fleet. Around 1791, Collingwood married Sarah Blackett, granddaughter of his former commander Robert Roddam.
As captain of HMS Barfleur, Collingwood was present at the Glorious First of June. On board the Excellent he participated in the victory of the Battle of Cape St. Vincent (1797), establishing a good reputation in the fleet for his conduct during the battle. After blockading Cadiz, he returned for a few weeks to Portsmouth to repair. At the beginning of 1799 Collingwood was raised to the rank of rear-admiral, and hoisting his flag in the Triumph, he joined the Channel Fleet, with which he proceeded to the Mediterranean, where the principal naval forces of France and Spain were assembled. Collingwood continued to be actively employed in blockading the enemy, until the peace of Amiens allowed him to return to England.
With the resumption of hostilities with France in the spring of 1803 he left home, never again to return. First he blockaded the French fleet off Brest.In 1804 was promoted to vice-admiral. Nearly two years were spent here but with Napoleon planning and equipping his armed forces for an invasion of Britain, the campaign which was to decide the fate of Europe and the command of the sea was starting. The French fleet having sailed from Toulon, Admiral Collingwood was appointed to command a squadron, with orders to pursue them. The combined fleets of France and Spain, after sailing to the West Indies, returned to Cadiz. On their way they encountered Collingwood's small squadron off Cadiz. He only had three ships with him; but he succeeded in avoiding the pursuit, although chased by sixteen ships of the line. Before half of the enemy's force had entered the harbour he resumed the blockade, using false signals to disguise the small size of his squadron. He was shortly joined by Nelson who hoped to lure the combined fleet into a major engagement.
The Royal Sovereign closed with the Spanish admiral's ship and fired her broadsides with such rapidity and precision at the Santa Ana, that the Spanish ship was on the verge of sinking almost before another British ship had fired a gun. Several other vessels came to her assistance, and hemmed in the Royal Sovereign on all sides; but the latter, after being severely damaged, was relieved by the arrival of the rest of the British squadron. Not long afterwards the Santa Ana struck her colours. On the death of Nelson, Collingwood assumed the supreme command. Despite Nelson's dying command that the fleet should anchor, Collingwood did not issue the order (battle damage may have prevented ships from anchoring even if ordered). In the ensuing storm, many of the captured prizes were lost.
Collingwood was raised to the peerage as Baron Collingwood of Coldburne and Heathpool, and received the thanks of both Houses of Parliament, with a pension of £2000 per annum.
When not at sea he resided at Collingwood House in the town of Morpeth which lies some 15 miles north of Newcastle upon Tyne. He is known to have remarked, "whenever I think how I am to be happy again, my thoughts carry me back to Morpeth."
Collingwood's merits as a naval officer were in many respects of the first order. He was considered inferior to Nelson in original genius and romantic daring. However he was Nelson's equal or even superior in seamanship, in general talent, and strategic thinking. His political judgement was remarkable and he was consulted on questions of general policy, of regulation, and even of trade. He was opposed to impressment and to flogging and was considered so kind and generous that he was called "father" by the common sailors. Between Nelson and Collingwood a close friendship existed, from their first acquaintance in early life till the Nelson's death at Trafalgar; and they lie side by side in St Paul's Cathedral. As Lord Collingwood died without male issue, his barony became extinct at his death.
Dudley Pope relates an aspect of Collingwood at the beginning of chapter three of his Life in Nelson's Navy: "Captain Cuthbert Collingwood, later to become an admiral and Nelson's second in command at Trafalgar, had his home at Morpeth, in Northumberland, and when he was there on half pay or on leave he loved to walk over the hills with his dog Bounce. He always started off with a handful of acorns in his pockets, and as he walked he would press an acorn into the soil whenever he saw a good place for an oak tree to grow. Some of the oaks he planted are probably still growing more than a century and a half later ready to be cut to build ships of the line at a time when nuclear submarines are patrolling the seas, because Collingwood's purpose was to make sure that the Navy would never want for oaks to build the fighting ships upon which the country's safety depended. . . ."
The town of Collingwood, Ontario on Georgian Bay, the suburb of Collingwood in the Australian city of Melbourne and the Collingwood Channel, in Canada, is named in his honour.
A statue erected in his honour overlooks the River Tyne in the town of Tynemouth, at the foot of which are some of the cannon from the Royal Sovereign.
One of the five houses of British public school Churcher's College is named after him, as is one of the four houses of Newcastle Royal Grammar School.