On the death of Peter II on June 1, 1847, the McNab house and a large part of the island went to his eldest son, James (Figure 6).

Born on November 30, 1792, he married Harriet King on December 9, 1815. James was a prominent merchant in Halifax. He operated as James McNab and Company until December, 1815, when the firm was dissolved. Three months later he and John E. Fairbanks announced the formation of Fairbanks and McNabs at the head of Fairbank's wharf, dealers in "Port and Maderia, Teas, Sugar, Coffee, Chocolate, Spices." Like his father and grandfather before him, James was destined to play a prominent role in provincial politics. In 1840 he was elected to represent Halifax in the Legislative Assembly and in 1848 was appointed to the Legislative Council. A supporter of Confederation, in 1867 he became Provincial Treasurer in the Blanchard administration. He resigned later that year with his colleagues following widespread opposition to Confederation by a majority of Nova Scotians.

The Novascotian of January 8, 1849, carried an advertisement, dated May 8, 1848, which offered McNabs Island for sale. It was signed by James McNab.

That Beautiful Property known as McNab's Island, situated at the entrance of Halifax Harbour, containing about 1400 ACRES, of which 3 to 400 acres are under Cultivation cuts about 120 tons of the best Upland Hay, and will keep to advantage, from 1,000 to 1,500 Sheep, for which it is particularly well adapted. The Homestead [original McNab residence], a comfortable Two Story House, contains five rooms, a Kitchen, and Pantry, on the first floor, six Rooms on the second floor, with a large frost proof Cellar under the whole; there are three large and commodious Barns with stabling for 15 to 20 head of Cattle, and room for 70 to 80 tons of Hay. At the North end of the Island, there is an excellent Two Story Stone Dwelling House [Peter III's home], with four Rooms, Pantry, and Hall in the first floor, with Kitchen, Dairy, Wash-house and Out Houses attached. There is also a large Dwelling House [formerly the Culliton home], in the South end of the Island, containing 8 rooms, with Cellars, &c. This building is partially out of repair, but, could be made comfortable at a small expense. There are various other small buildings on the Island, occupied by the present tenants.

The notice also claimed that about one-half of the island was covered with hardwood, that an abundance of fish could be found around the shores of the island and large quantities of ballast stone from the beaches were sold annually. Although the advertisement claims that "a good bargain may be expected," and 500 sheep "of the most approved breeds" were offered as a bonus, the property remained unsold for several years.

James McNab's interest in the island was subsequently divided among three of his sons-in-law (Figure 7). James died on October 16, 1871, and is buried at Camp Hill Cemetery. His wife, Harriet, passed away on October 15, 1878.