The aftermath of the 1920 election was the first time since Roosevelt's political career began that he was without a political post. He went to work briefly at the firm of Emmet, Marvin, and Roosevelt, but then moved to the position of Vice President of the Fidelity and Deposit Company of Maryland. It was at this time that he faced the biggest scandal of his political career, the Newport sex scandal. FDR had commanded a vice-squad to stop a rumored sex scandal going in a Newport naval base, but the vice squad had become involved with sodomy and homosexuality themselves. Homosexuality, no small flaw in the eyes of the Army even today, was at that time a prosecutable offense. The subcommittee assigned to the case in Congress was made up of two Republicans and one Democrat. The report was released without FDR being given a chance to defend himself against the charge that the vice squad had been under his direct supervision when it engaged in sodomy, supposedly to gather evidence against the original criminals. The furor over these allegations quickly subsided because of the obvious partisan bias of the accusations, a fact that Roosevelt repeatedly pointed to in his speeches. FDR's luck and political cunning again saved him from sure political demise.

On August 10, 1921, while vacationing with his family at Campobello, their island summer home in New Brunswick, Canada, FDR went for a swim and returned too tired to even remove his own bathing suit. He was soon found to have suffered paralysis in both legs due to polio. He spent the next few months recovering in the hospital. Doctors were initially very optimistic about FDR's chances for a complete recovery, but quickly realized that it would be difficult for him to ever sit up again without help. FDR's strong spirit was truly challenged for the first time in the hospital room, and it came alive. He did not allow himself to succumb to despondency. Although his legs atrophied, he practiced such rigorous exercise that his torso and arms as an older, paralyzed man were a far stronger frame than when he played football in college. By early 1922, FDR had become comfortable in a wheelchair, and could drag himself around pulling his weight entirely with his upper body.

While FDR fought a physical battle, Eleanor and her now trusted comrade Louis Howe plotted to keep the Roosevelt name alive in politics. Both Howe and Eleanor had the foresight to see that politics would play a much more important role in FDR's life, now that he was left without the physical activities that had offered him much of the outlet for his energies thus far. Howe kept up FDR's correspondence with politicians all over the country, cementing his relationship with Democratic Party leaders. Eleanor toured the country attending speeches, political rallies, and social engagements to keep her husband's name in the limelight.

FDR's bout with polio, not surprisingly, had a profound emotional impact on him. Frances Perkins, a leading feminist and reformer of the day and later the first female member of the Cabinet, commented that "FDR underwent a spiritual transformation during the years of his illness, emerging warmhearted, with humility of spirit and a deeper philosophy." Roosevelt emerged from his illness with greater serenity than ever before, remarking once that after "trying for two years to wiggle one toe, all else seemed easy." He also became a greater conversationalist than before, realizing that his words were the primary weapon that now would carry him through life. Many of his close friends and admirers, such as his son James, believe that his path would have led him to the White House regardless of his sickness. Whether or not his paralysis increased his determination to be in the White House is uncertain. What is certain is that Roosevelt, for the first time in his life, experienced something drastically different from the privilege and comfort that had surrounded him all his life. His physical struggles allowed him to truly empathize with–not merely pity–the day-to-day struggles of the masses of Americans who suffered the most from the Depression that was to come.