The Sinn Féin Deputy First Minister also questioned the need for the continued existence of a Secretary of State.
The transfer of remaining powers would be a massive vote of confidence in the political institutions as well as a massive saving to the Exchequer.
On Monday night, in an address at the London School of Economics, he declared: "As Ian Paisley said to me during our first meeting 'Martin, we can rule ourselves, we do not need these direct rule ministers coming over here telling us what to do'."
The region has had a British Secretary of State based in Hillsborough Castle, Co Down, since 1972.
It followed the suspension of the Stormont Parliament because of civil unrest at the time.
But 14 years after the signing of the Good Friday Agreement, Mr McGuinness said there was also a need for a change in British Government policy in relation to the Union.
The Mid-Ulster MP said: "It has been often said that the Easter Rising marked the end of the British Empire as it was known.
"The days of colonialism and domination had to end."
He said that peoples' right to national self-determination and freedom "would have to take preference to the economic needs of the colonial masters."
"And I say that, not to be provocative or to engage in rhetoric, but to simply mark out a significant landmark on the historical road which has led us to where we are now."
He continued:"In constitutional terms, whereas the Rising marked the beginning of the end of the Empire as people knew it, it is my belief that the Good Friday Agreement marked the end of the Union, as we know it."
That belief, he said, had been strengthened and confirmed not just by what was happening in Ireland, but also with events elsewhere, with the demand for Scottish independence and greater Welsh autonomy.
The constitutional fabric of the British State had been changed forever, he claimed.
Mr McGuinness, a former IRA leader, added: "As an Irish Republican leader I am clearly unapologetic about my belief in Irish national self-determination. I am also absolutely wedded to the political and peace process."
A united Ireland makes sense, he said.
"In many ways the political progress in the North over recent years has levelled the political playing field for nationalists and republicans to argue for the first time ever from a position of equality that Irish unity is a political and economic imperative."
Mr McGuinness said the debate "should not be confined to Ireland."
"There is a role for people in Britain to become persuaders for Irish unity.
"Tonight I call on all those in Britain to become voices for an altered union, a union without Ireland, for a united Ireland, at peace with itself and its neighbours, including Britain."
He also called for a dialogue on how we heal the hurt, and move into a new era.
The Democratic Unionist MP Jeffrey Donaldson said the proposals were nonsensical.
He branded them as an attempt to push an anti-Unionist, pro-united Ireland message and only served to cause division.
He claimed: "It is hardly surprising that at a time when Catholic support for the Union is at an all-time high Sinn Fein are attempting to divert attention from the fact that their United Ireland strategy is in tatters.
"Our position within the Union has never been more secure and support for the Union has never been stronger."