He returned to the United States for health reasons in 1875, and refused a call to become missionary bishop of Shanghai, since bishop Channing Moore Williams had requested division of his huge episcopate (including both China and Japan). However, two years later, Schereschewsky accepted the call to that bishopric from the Episcopal House of Bishops, after receiving assurances of financial support for his dream of building a college to educate Chinese in Shanghai. Schereschewsky was consecrated Bishop in Grace Church, New York, on October 31, 1877 and two years later founded St. John's College (later renamed St. John's University). He served as Bishop of Shanghai until 1883, when he resigned his bishopric for health reasons (having become increasingly incapacitated after suffering a sun stroke in 1881).