The highway enters the Portland city limits near the Sylvan-Highlands neighborhood, where it is also joined by OR 8; east of here, the highway descends a steep grade through a canyon which penetrates Portland's Tualatin Mountains; this stretch of the Sunset is coincident with Canyon Road. The highway skirts the southern edge of Portland's Washington Park, providing access to the Oregon Zoo and other attractions. At the bottom of the grade, the highway passes through the Vista Ridge Tunnels into Downtown Portland. Immediately east of the tunnel is an interchange with Interstate 405 (I-405); this interchange is the end of the Sunset Highway.
In Portland, the route overlaps I-405 (Stadium Freeway No. 61) for a short distance before exiting onto city streets, including Arthur Street, to reach the Ross Island Bridge. US 26 leaves the bridge, which is at the beginning of the Mount Hood Highway No. 26, and follows Powell Boulevard, a surface street, to Gresham.
At that junction, US 26 picks up the Ochoco Highway No. 41, which also follows OR 126 west to US 97 in Redmond. The Ochoco Highway ends at OR 19 near Dayville, from which US 26 follows the John Day Highway No. 5 through John Day to US 20 in Vale. The remainder of US 26 in Oregon overlaps US 20 on the Central Oregon Highway No. 7 to the Idaho state line.
The highway was originally named the Wolf Creek Highway after a nearby creek of the same name. The Oregon State Highway Commission renamed it the Sunset Highway at their January 17, 1946, meeting by a unanimous vote. The name is drawn from both the nickname and insignia of the 41st Infantry Division, which was largely drawn from Oregon,[5] and because the highway leads towards the setting sun.[6] The highway was rededicated in honor of the 41st Infantry Division in 1995.[7]
In the 1960s, Powell Boulevard in Portland was proposed as the corridor of the Mount Hood Freeway, which would have replaced US 26. It was cancelled in 1974 following a protests and local opposition. A few ramp stubs from I-5 on the Marquam Bridge were built to prepare for the new freeway and remained in place until the 2010s.[8][9] The state and county government later considered moving US 26 to Division Street between I-205 and Gresham to improve freeway access.[10] The cancelled freeway included plans to bypass Sandy, which were later revived in the 2000s and 2010s to address congestion issues in the area.[11]
Milepoints are as reported by ODOT and do not necessarily reflect current mileage. Z indicates overlapping mileage due to construction longer than established route, and – indicates negative mileage behind established beginning point.[15] Segments that are locally maintained may be omitted. For routes traversing multiple named state highways, each milepoint is preceded by the corresponding state highway number.