Tilden was still popular among Democrats, despite questions concerning his possible involvement in the thwarted attempt by his nephew, Colonel William T. Pelton, and other associates to bribe electors during the electoral college controversy of 1876-1877. Tilden, though, suffered from a number of physical ailments, such as arthritis and palsy, which discouraged him from running. Furthermore, his candidacy was adamantly opposed by John Kelly, the leader of Tammany Hall, New York City's influential Democratic political machine. Kelly had only reluctantly endorsed Tilden in 1876, but later broke completely with the former governor. Therefore, Tilden played the role of de facto party leader, not presidential candidate.

Entering the race was Senator Thomas Bayard of Delaware. He was a respected politician, but his firm hard-money views alienated soft-money supporters, while his initial acquiescence in Southern secession would hurt him against a Republican ticket of two former Union generals, Garfield and Arthur. Bayard was also unlikely to gain the approval of Tilden because of the senator's membership on the 1877 Electoral Commission (despite voting for the Democratic returns and, in effect, Tilden). Samuel J. Randall of Pennsylvania, the Democratic speaker of the house, wanted the nomination, but was unwilling to campaign for it. His coyness was reciprocated by the aloofness of Tilden, whose enthusiastic endorsement might have assured the speaker of the nomination. In addition, Randall's advocacy of protective tariffs estranged him from Democratic free-traders.

Horatio Seymour, the 1868 presidential nominee, said he would rather have his own funeral than the nomination again. That prize was eagerly sought, however, by Thomas Hendricks of Indiana, the 1876 vice-presidential nominee, and Supreme Court Justice Stephen Field of California (another member of the 1877 Electoral Commission), but neither candidate enjoyed wide support. Other hopefuls included Senator Allen Thurman of Ohio and former congressman Henry Payne also of Ohio (both were on the 1877 Electoral Commission). General Winfield Hancock of Pennsylvania became the leading choice of the delegates, primarily for his lack of negatives and his acceptability to all factions within the Democratic party. He had been a contender for the nomination in 1868, but that convention decided to bypass the former Union general, whose courage had earned him the nickname "Superb," for the governor who appeased the New York draft rioters (i.e., Horatio Seymour).

The only controversy at the Democratic National Convention, meeting in Cincinnati on June 22-23, was whether to seat "Boss" Kelly's delegation. Since Tammany Hall had earlier bolted the regular New York Democratic convention to select their own delegates, the national body refused to recognize them. At the same time, the national convention delegates knew that in order to win New York and the election, they could not nominate a candidate opposed by Tammany Hall. On the first ballot, Hancock edged Bayard, 171-153½. On the second ballot, belated support from Tilden delegates pushed Randall into second place with 128½ votes, with Bayard falling to 112, and Hancock surging to 310. Before the voting ended, Wisconsin led the charge of states switching to Hancock, giving the "Superb" general a second-ballot victory of 705 votes (soon made unanimous).

To help secure the key state of Indiana, the convention chose former congressman William English, an Indianapolis "banker with a barrel" (of money), as the vice-presidential nominee. English, though, had many political enemies in his home state, including former governor Thomas Hendricks. The Democratic platform was purposefully vague in order to hold the factious party together and not offend any voters.

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