The by-election was caused by the resignation of the incumbent, William Reynolds. In 1867, there was great political turmoil in Otago over the New Zealand Wars fought in the North Island and its associated expenditure, and calls for separation of the South Island from the North Island. At a public meeting called by the Mayor of Dunedin, William Mason, Reynolds and James Paterson, who represented the City of Dunedin, both agreed that they would resign and then see whether they still had public support. Reynolds went ahead with his resignation but Paterson did not.