In 1982 he was elected to the Prior Assembly for North Down and two years later he became the new leader of Alliance, succeeding Oliver Napier. During his tenure as leader he sought to strengthen the party's links with the British Liberal Party. The Anglo Irish Agreement was signed during this period and Cushnahan faced the difficult position of giving Alliance support to it and facing the united opposition of the Unionist parties. However, when the Assembly was dissolved in 1986, Cushnahan found it financially difficult to remain in politics and so stood down as leader in 1987 to be succeeded by John Alderdice.