Otway continued to use family and financial influence to climb the ranks, becoming a captain in October 1798 and major in 1803 after the outbreak of the Napoleonic Wars. In 1804, Otway transferred to the 8th Dragoons and spent time in Canada in the adjutant-generals office. Returning to Europe in 1807, Otway volunteered for service in Portugal and Spain with the 18th Light Dragoons and was attached to Sir Arthur Wellesley's army, although he did not see any action before the temporary peace treaty. Joining Sir John Moore's forces in Galicia, Otway's regiment was instrumental in covering its retreat to Corunna and was engaged in several cavalry engagements at Rueda, Valladolid, Sahagún and Benavente. In the course of these operations, Otway distinguished himself and captured a large quantity of enemy troops, including a French general.