Pope Pius XII appointed Valdés as the first Bishop of Osorno on 20 June 1956 with Sebastiano Baggio conferring upon him episcopal consecration on 16 September. Valdés attended all sessions of the Second Vatican Council from 11 October 1962 to 8 December 1965 as a Council Father. He was an ardent supporter and staunch advocate for dialogue and peace between Chile and Argentina in their border dispute and made repeated calls for fraternal negotiations aimed at ensuring better cooperation and coexistence between the two nations. Valdés loved sacred music and liturgical celebrations and in 1966 presided over an Episcopal Commission on liturgical celebration to better enhance such celebrations as an expression of faith. He inaugurated the new diocesan cathedral in 1977 after the previous one had fallen during the Valdivia earthquake in 1960.