In contrast, the Evangelical Lutheran Church in Canada (ELCIC) and the Evangelical Lutheran Church in America (ELCA) are more moderate and more accepting of homosexuals than the LCMS, though until recently neither denomination was as welcoming as most of the European Lutheran denominations.

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The Evangelical Lutheran Church in Canada (ELCIC), consisting of some 160,000 members in more than 600 congregations, had officially considered homosexuality sinful, though that stance was modified by a new report on human sexuality adopted by the National Conference in 2011.

In practice, there is a range of beliefs among members of the ELCIC, some firmly holding to the belief that Biblical passages and tradition mandate that homosexuality be considered intrinsically sinful, while others believe that the Gospel message of love, justice, and inclusion demand that homosexuality be considered an orientation as valid and morally neutral as heterosexuality.

The controversy in the ELCIC has centered on the issues of ordaining clergy who are sexually active homosexuals and on blessing same-sex marriages.

In contrast to leaders of the United Church of Canada, who lobbied in favor of same-sex marriage, the National Bishop of the ELCIC lobbied against same-sex marriage in a letter to Prime Minister Martin when the Canadian Parliament was set to vote on the issue in 2005.

While recognizing that his Church was divided over the question of same-sex marriage, Bishop Schulz argued that the institution of marriage was "a unique relationship between a man and woman" involving the raising of children (an argument that had already been rejected by numerous Canadian courts), and concluded that "I would prefer that the legal definition of marriage remain defined as the union of a man and a woman to the exclusion of all others and would provide for the recognition of gay and lesbian relationships by way of another legal designation or a new social institution."

The legalization of same-sex marriage in Canada did not, of course, require churches to perform same-sex marriages and the ELCIC refused to perform same-sex marriages or to bless same-sex unions for many years after same-sex marriage became legal in Canada. In 2003, the Conference of Bishops declared: "Since the Evangelical Lutheran Church in Canada has no official policy authorizing clergy to bless same sex relationships, pastors are not permitted to perform such rites and will be disciplined for doing so. For the sake of the unity and good order of the church, it is important that any changes to this practice be authorized by this church acting together."

In 2004, the Eastern Synod of the ELCIC formally petitioned the National Church Council to "initiate a study of the theological, ecclesiological, and pastoral implications of authorizing a parish-based local option to perform same-sex blessings."

In 2006, the Church Conference of the Eastern Synod overwhelmingly voted to allow a "local option" for congregations to offer blessings of same-sex unions. In response, the National Church Council ruled that the question was under its jurisdiction, and the Eastern Synod relented.

Similarly, the question of ordination of sexually active gay and lesbian clergy was controversial within the ELCIC for many years. The official policy until 2011 was that "A self-declared and practicing homosexual is not to be approved for ordination and, if already ordained, is not to be recommended for call."

In 2008, however, Holy Cross Lutheran Church, in the Eastern Synod of ELCIC, ordained Lionel Ketola, who is legally married to another man. He was appointed Associate Pastor and "Ambassador of Reconciliation."

In response to his installation, which was attended by many fellow clergy, the Bishop and Synod Council of the Eastern Synod suspended Holy Cross from full participation in the conference, synod, and national conventions. The suspension of the congregation was to last until Ketola is no longer affiliated with the church or until his ordination is approved by the ELCIC.

Tellingly, the Bishop of the Eastern Synod added a paragraph to the suspension letter that he and the Council had pledged to work toward "changing policies that preclude the full participation of all God's people in our ecclesial life."

In 2009, Ketola left his position and the suspension of Holy Cross was lifted.