In 1842 the secret practice of polygamy was starting to fracture the leadership of Nauvoo. John C. Bennett was excommunicated for unauthorized polygamous liaisons and was forced to resign as mayor of Nauvoo. Joseph was appointed mayor in Bennett's stead, becoming Nauvoo's political as well as religious and military leader. Meanwhile, Bennett left the city determined to retaliate by exposing what he knew of the prophet's unorthodox sexual behavior, and lobbying the Illinois legislature to repeal Nauvoo's charters.

In the course of the Bennett scandal, Sidney Rigdon learned that the prophet had secretly proposed to his daughter, Nancy Rigdon. This was apparently the first Rigdon knew of the prophet's polygamy, and resulted in his severe alienation from the prophet. When Orson Pratt learned that the prophet had proposed to his wife Sarah, he almost committed suicide. When Hyrum Smith learned of his brother's behavior, he too was outraged and began plotting to expose Joseph.

Meanwhile, financial difficulties were starting the haunt Joseph and the church. There were still outstanding debts from Ohio, and church leaders learned that many of the land transactions which had taken place in conjunction with the settlement of Nauvoo had been invalid. Joseph used a new federal bankruptcy law which had just been passed in February 1842 to apply for relief, though federal authorities were convinced that Joseph was trying to defraud the government. (Most of these financial disputes were not resolved until years after the prophet's death.)

In August 1842, Joseph and Porter Rockwell were arrested on charges of conspiring to murder former Missouri governor Lilburn W. Boggs, but were released by the Nauvoo Municipal Court under writs of habeas corpus. The same day, the Nauvoo city council passed an ordinance--probably illegal, and unlikely to be upheld by the State Supreme Court--giving Nauvoo courts supreme authority to judge the validity of any writ served on a citizen of Nauvoo. The sheriffs went to Springfield to complain to Governor Carlin, who had authorized the extradition to Missouri. When they returned to Nauvoo, Joseph had gone into hiding and Porter Rockwell had fled the state.

After remaining in hiding for about five months, Joseph agreed to turn himself in after receiving assurances from his attorney that the extradition to Missouri was probably illegal, and that Joseph could be cleared in court. Judge Pope did in fact rule that the State of Missouri did not have the right to extradite a resident of Illinois for a crime (in Joseph's case, conspiracy) that was supposedly committed in Illinois. This decision was unpopular among non-Mormons who resented the growing power of Nauvoo, which they saw as holding itself above the law.