In the governor's race of 1926, McAlister sought the Democratic Party's nomination against the incumbent, Austin Peay. Peay had radically transformed the state government, and had angered numerous members of his own party in the process, among them political bosses E. H. Crump of Memphis and Hilary Howse of Nashville. With the help of Crump and Howse, McAlister was able to win Shelby and Davidson counties, but Peay won the state's rural areas and East Tennessee, and defeated McAlister for the nomination by 7,000 votes.