Although Wilson had primarily been elected to reform national politics and initiate new progressive policies in Washington, he spent the majority of his time as President dealing with foreign policy rather than domestic. Wilson's predecessors, including McKinley, Theodore Roosevelt, and Taft, had viewed the United States as an emerging power that needed to extend its influence throughout the world in order to serve national interests. This imperialist policy was justified by the commonly held belief that it was America's duty as a Christian republic to spread democracy throughout the world. These three Presidents significantly expanded America's influence abroad with the annexation of colonies throughout the world, such as the Philippines and Cuba.

Wilson, however, abandoned this imperialist policy and brought to the White House a new way of looking at America's relations with the outside world. Even though he too believed that the United States was the most politically enlightened nation under God, he felt that all peoples throughout the world had the right to self-determination–that the people in every country should have the right to choose their own governments. Wilson, along with his Secretary of State Bryan, felt that it was America's duty to protect democracy and free peoples in other countries rather than to spread it throughout the globe.

Prior to the outbreak of World War I, protecting democracy throughout the world primarily meant protecting the fledgling republics in Latin America that had struggled in decades past with corrupt governments, pressures from European powers, and even American imperialism under President Roosevelt. To atone for these mistakes, and to demonstrate that the United States did indeed intend to uphold the Monroe Doctrine, Wilson spent several of his first years dealing with Latin American issues. He persuaded Congress to repeal the 1912 Panama Canal Act which exempted many American ships from paying the required toll for passage through the canal. He signed a treaty with the South American country of Colombia to apologize for Roosevelt's acts of aggression during the American- driven Panama Revolution in 1903.

These were Wilson's only successes in Latin American relations, however. The rest of his dealings with South, Central, and Caribbean American countries largely failed, and many of them even resulted in bloodshed. Wilson's attempt to help Nicaraguan rebels eventually required him to occupy the country by force in 1914. The same blunder occurred in Haiti in 1915 and the Dominican Republic in 1916, when Wilson eventually sent in American troops to occupy the islands. During Wilson's Presidency, the United States also purchased the Virgin Islands from Denmark. It is ironic that despite his loathing of imperialism and his deep belief in self-determination, Wilson resorted to military action in Latin America just as his predecessors had.

Although Wilson had problems in the Caribbean, his greatest challenge came from Mexico. In 1913, Mexico fell into a bloody revolution when Mexican general Victoriano Huerta overthrew the nation's government and declared himself its military dictator. Wilson immediately denounced Huerta, declaring that the United States could not and should not recognize violent dictators who seized government in pursuit of their own agendas. The President attempted to initiate peaceful negotiations between Huerta and the usurped government, but both sides refused to submit to his proposal. Unsure how to proceed, Wilson permitted Huerta's enemies, the Constitutionalists, to purchase military equipment and arms in the U.S. in order to stage a counterrevolution.

When the dictator's army seized a small group of American sailors on shore leave in Mexico, Wilson demanded an apology. He also demanded that Huerta publicly salute the American flag in Mexico, which Huerta naturally refused to do. Wilson responded with force: in April 1914, he sent American Marines to take and occupy Veracruz, Mexico's primary seaport. Veracruz was taken, but eighteen Americans were killed in the battle. Not wanting to commit the U.S. to war, Wilson also requested the ABC powers–Argentina, Brazil, and Chile–to mediate the dispute. With their arbitration, the conflict was eventually resolved. Huerta fled the country, and a new government was established in 1915 under the leadership of Constitutionalist President Venustiano Carranza.

Despite the settlement, Wilson's Mexican troubles were not yet over. Soon after Carranza was instated as Mexico's new president, one of his chief generals, Pancho Villa, led a second revolution to depose Carranza. A second bloody civil war erupted in Mexico barely after the first had ended. To encourage the American military to enter the conflict, Villa sent his forces into the U.S., where they destroyed the town of Columbus, New Mexico, and killed nineteen Americans. This produced the reaction Villa sought: within days of the raid on Columbus, Wilson sent the Punitive Expedition of 5,000 U.S. Army regulars, led by General John J. Pershing, into Mexico to find Villa.

Within a month, Pershing and his men had traveled over 300 miles south into the heart of Mexico in an unsuccessful pursuit of Villa. Wilson ignored President Carranza's threats of war, and the two armies eventually clashed on April 12, 1916, and again on June 21, 1916. Both countries prepared for war; Wilson mustered 100,000 troops on the border in Texas. Fortunately, however, war was averted when Carranza petitioned for mediation. An agreement was reached in early January 1917 when Wilson recalled Pershing and officially recognized Carranza's government.

Yet, despite his troubles in the Caribbean and with Mexico, President Wilson did not fail entirely. Prior to World War I, he did have a few minor foreign policy successes besides those in Panama. Though he was forced to abandon his belief in self determination in Nicaragua, Haiti, and the Dominican Republic, Wilson was successful in persuading Congress to pass the Jones Act in 1916, which gave the American-occupied Philippines Islands significantly more political autonomy. He also encouraged Chinese independence–unlike McKinley, Roosevelt, and Taft, who had all sought to increase American influence in East Asia at China's expense–and supported China in a territorial dispute with Japan.

These early exercises in foreign policy, although they appeared dire at the time, proved to be mere tests for Wilson compared to problems he faced in his second term. Within a year of Wilson's second inauguration, Europe collapsed into the deadliest war conceivable, and the rest of the world soon followed. It eventually fell on Wilson to determine America's course of action, the outcome of the Great War, and the new world order that would emerge.