Masterman was returned to parliament at a by-election in 1911, this time at Bethnal Green South West. In 1914 he was appointed to the Cabinet. This may not sound too unlucky, but under the rules at the time, newly-appointed ministers had to resign their seat and re-contest it. Masterman lost the resulting by-election. He tried again in a by-election at Ipswich, but again failed and had to resign from the cabinet.
Masterman eventually returned to the House of Commons in the 1923 general election, as MP for Manchester Rusholme, but he again lost his seat in the 1924 general election.
After this his health declined rapidly, hastened by drug and alcohol abuse. He died in 1927. However, his son, Neville, lived to celebrate his 100th birthday in 2012.