Salazar studied at the Viseu Seminary from 1900 to 1914 and considered becoming a priest, but changed his mind. He studied law at Coimbra University during the first years of the republican government.

As a young man, his involvement in politics stemmed from his Catholic views, which were aroused by the new anti-clerical Portuguese First Republic. Writing in Catholic newspapers and fighting in the streets for the rights and interests of the Church and its followers were his first forays into public life.

During Sidónio Pais's brief dictatorship from 1917 to 1918, Salazar was invited to become a minister, but declined. He formally entered politics in the following years, joining the conservative Catholic Centre, and was elected to Parliament but left it after one session. He taught political economy at the University of Coimbra.

After the 28th May 1926 coup d'état, he briefly joined José Mendes Cabeçadas's government as the 71st Minister of Finance on 3 June 1926, but quickly resigned, explaining that since disputes and social disorder existed in the government, he could not do his work properly. Later again, he became the 81st Finance Minister on 26 April 1928, after the Ditadura Nacional was consolidated, paving the way for him to be appointed the 101st Prime Minister in 1932. He remained Finance Minister until 1940, when World War II consumed his time.

His rise to power is due to the image he was able to build as an honest and effective Finance Minister, President Carmona's strong support, and political positioning. The authoritarian government consisted of a right-wing coalition, and Salazar was able to co-opt the moderates of each political current while fighting the extremists, using censorship and repression. The Catholics were his earliest and most loyal supporters, although some resented the continued separation of church and state. The conservative republicans who could not be co-opted became his most dangerous opponents during the early period. They attempted several coups, but never presented a united front, so these coups were easily repressed. Never a true monarchist, Salazar nevertheless gained most of the monarchists' support, as he had the support of the exiled deposed king, who was given a state funeral at the time of his death.

The National Syndicalists were torn between supporting the regime and denouncing it as bourgeois. They were given enough symbolic concessions to win over the moderates, and the rest were repressed by the political police. They were to be silenced shortly after 1933, as Salazar attempted to prevent the rise of National Socialism in Portugal. Salazar also supported Francisco Franco and the Nationalists in their fight against the left-wing groups of the Spanish Republic. The Nationalists lacked ports early on, and Salazar's Portugal helped receive armaments shipments from abroad - including ammunition early on when certain Nationalist forces were virtually out. Because of this, "the Nationalists referred to Lisbon as 'the port of Castile.'"

The prevailing view, at the time, of political parties as elements of division and parliamentarism as being in crisis led to general support, or at least tolerance, of an authoritarian regime. In 1933, Salazar introduced a new constitution which gave him wide powers, establishing an anti-parliamentarian and authoritarian government that would last four decades. Salazar developed the "Estado Novo" (literally, New State). The basis of his regime was a platform of stability. Salazar's early reforms allowed financial stability and therefore economic growth. This was then known as "A Lição de Salazar" - Salazar's Lesson.

Although Portugal had a high level of illiteracy, the Salazar regime didn't consider education a high priority and for many years didn't spend much on it, beyond granting basic education to all citizens. However, in the final years of Salazar's rule and the six years from his death to the fall of the Estado Novo regime in 1974, educational development was prioritized and there was substantial investment in educational infrastructure. At this stage, secondary, vocational/technical and university education reached record high enrollments. Many of the schools created by Salazar were still in operation many decades after the end of the regime in 1974.

Salazar's regime was rigidly authoritarian. He based his political philosophy around a close interpretation of Catholic social doctrine, much like the contemporary regime of Engelbert Dollfuß in Austria. The economic system, known as corporatism, was based on a similar interpretation of the papal encyclicals Rerum Novarum (Leo XIII, 1891) and Quadragesimo Anno (Pius XI, 1931), which was supposed to prevent class struggle and supremacy of economics. Salazar himself banned Portugal's National Syndicalists, a true Fascist party, for being, in his words, a "Pagan" and "Totalitarian" party. Salazar's own party, the National Union, was formed as a subservient umbrella organisation to support the regime itself, and was therefore lacking in any ideology independent of the regime. At the time many European countries feared the destructive potential of communism. Many neutral states in World War II sympathized, at least in principle, with any state that would wage war on the Soviet Union. Salazar not only forbade Marxist parties, but also revolutionary fascist-syndicalist parties.

Salazar relied on the secret police, first the PVDE (Polícia de Vigilância e de Defesa do Estado - "State Defence and Surveillance Police") set up in 1933 and modeled on the Gestapo and later the PIDE (Polícia Internacional e de Defesa do Estado) established in 1945 and lasting till 1969 (until 1974, under Marcelo Caetano, the Estado Novo's police would be called DGS - Direcção Geral de Segurança, "General Security Directorate"). The job of the secret police was not just to protect national security in a typical modern sense but also to suppress the regime's political opponents, especially those related to the international communist movement or the USSR which was seen by the regime as a menace to Portugal. The PIDE was efficient, however, it was less overtly brutal than its predecessor and the foreign polices that were the model for its creation. A number of prisons were set up by Salazar's right-wing authoritarian regime after the outbreak of the Spanish Civil War (1936), where opponents of Estado Novo were sent. The Tarrafal in Cape Verde archipelago was one of them. Anarchists, communists, African independence movements guerrillas and other opponents of Salazar's regime died or were made prisoners for many years in those prisons.

Salazar essentially ruled unopposed until the 1950s, when a new generation who had no memory of the near-chaos that prevailed before 1926 gained momentum. However, he was able to stay in power because the political structure was heavily rigged in favour of the regime candidates.

During World War II, Salazar steered Portugal down a middle path, but nevertheless provided aid to the Allies: naval bases on Portuguese territory were granted to Britain, in keeping with the traditional Anglo-Portuguese alliance, and the United States, letting them use Terceira Island in the Azores as a military base; although he only agreed to this after the alternative of an American takeover by force of the islands was made clear to him by the British. Portugal, particularly Lisbon, was one of the last European exit points to the U.S., and a huge number of refugees found shelter in Portugal, many of them with the help from the Portuguese consul general in Bordeaux, Aristides de Sousa Mendes, who issued visas against Salazar's orders. Siding with the Axis would have meant that Portugal would have been at war with Britain, which would have threatened Portuguese colonies, while siding with the Allies might prove to be a threat to Portugal itself. Portugal continued to export tungsten and other goods to both the Axis (partly via Switzerland) and Allied countries.

Large numbers of Jews and political dissidents, including Abwehr personnel after the 20 July plot of 1944, sought refuge in Portugal, although until late 1942 immigration was very restricted.

The colonies were in disarray after the war. In 1945, Portugal had an extensive colonial Empire, including Cape Verde Islands, São Tomé e Principe, Angola (including Cabinda), Portuguese Guinea, and Mozambique in Africa; Goa, Damão (including Dadra and Nagar Haveli), and Diu in India (the Portuguese India); Macau in China; and Portuguese Timor in Southeast Asia. Salazar, a fierce integralist, was determined to retain control of Portugal's colonies. The overseas provinces were a continual source of trouble and wealth for Portugal, especially during the Portuguese Colonial War. Portugal became increasingly isolated on the world stage as other European nations with African colonies gradually granted them independence.

Salazar wanted Portugal to be relevant internationally, and the country's overseas colonies made this possible, while Salazar himself refused to be overawed by the Americans. Portugal was the only non-democracy among the founding members of NATO in 1949, which reflected Portugal's role as an ally against communism during the Cold War. Portugal was offered help from the Marshall Plan because of the aid it gave to the Allies during the final stages of World War II; aid it initially refused but eventually accepted.

Throughout the 1950s, Salazar maintained the same import substitution approach to economic policy that had ensured Portugal's neutral status during World War II. The rise of the "new technocrats" in the early 1960s, however, led to a new period of economic opening up, with Portugal as an attractive country for international investment. Industrial development and economic growth would continue all throughout the 1960s. During Salazar's tenure, Portugal also participated in the founding of OECD and EFTA.

The Indian possessions were the first to be lost in 1961. After the Republic of India was formed upon independence on August 15, 1947, the British and the French vacated their colonial possessions in India. Indian nationalists in Goa launched a struggle for Portugal to leave, involving a series of strikes and civil disobedience movements by Indians against the Portuguese administration, which were ruthlessly suppressed by Portugal. India made numerous offers to negotiate for the return of the colonies, but Salazar repeatedly rejected the offers. With an Indian military operation imminent, Salazar ordered Governor General Manuel António Vassalo e Silva to fight till the last man, and adopt a scorched earth policy. Eventually, India launched Operation Vijay in Dec 1961 to evict Portugal from Goa, Daman and Diu. 31 Portuguese soldiers were killed in action and a Portuguese Navy frigate NRP Afonso de Albuquerque was destroyed, before General Vassalo e Silva surrendered. Salazar forced the General into exile for disobeying his order to fight to the last man and surrendering to the Indian Army.

In the 1960s, armed revolutionary movements and scattered guerrilla activity had reached Mozambique, Angola, and Portuguese Guinea. Except in Portuguese Guinea, the Portuguese army and naval forces were able to effectively suppress most of these insurgencies through a well-planned counter-insurgency campaign using light infantry, militia, and special operations forces. Most of the world ostracized the Portuguese government because of its colonial policy, especially the newly independent African nations.

At home, Salazar's regime remained unmistakably authoritarian. He was able to hold onto power with reminders of the instability that had characterized Portuguese political life before 1926. However, these tactics were decreasingly successful, as a new generation emerged which had no collective memory of this instability. In the 1960s, Salazar's opposition to decolonization and gradual freedom of the press created friction with the Franco dictatorship.

Economically, the Salazar years were marked by immensely increased growth. From 1950 until Salazar's death, Portugal saw its GDP per capita rise at an average rate of 5.66% per year. This made it the fastest growing economy in Europe. Indeed, the Salazar era was marked by an economic program based on the policies of autarky and interventionism, which were popular in the 1930s as a response to the Great Depression. During his tenure, Portugal was co-founder of OECD and EFTA. Financial stability was Salazar's highest priority. In order to balance the Portuguese budget and pay off external debts, he instituted numerous taxes. Having adopted a policy of neutrality during World War II, Portugal could simultaneously loan the Base das Lages in the Azores to the Allies and export military equipment and metals to the Axis powers. In 1960, at the initiation of Salazar's more outward-looking economic policy, Portugal's per capita GDP was only 38 percent of the European Community (EC-12) average; by the end of the Salazar period, in 1968, it had risen to 48 percent; and in 1973, under the leadership of Marcelo Caetano, Portugal's per capita GDP had reached 56.4 percent of the EC-12 average. On a long term analysis, after a long period of economic divergence before 1914, and a period of chaos during the Portuguese First Republic, the Portuguese economy recovered slightly until 1950, entering thereafter on a path of strong economic convergence until the Carnation Revolution in April 1974. Portuguese economic growth in the period 1950 – 1973 under the Estado Novo regime (and even with the effects of an expensive war effort in African territories against independence guerrilla groups), created an opportunity for real integration with the developed economies of Western Europe. Through emigration, trade, tourism and foreign investment, individuals and firms changed their patterns of production and consumption, bringing about a structural transformation. Simultaneously, the increasing complexity of a growing economy raised new technical and organizational challenges, stimulating the formation of modern professional and management teams.

His reluctance to travel abroad, his increasing determination not to grant independence to the colonies and to stand against the "winds of change" announced by the British in their move to liberate their major colonies, and his refusal to grasp the impossibility of his regime outliving him, marked the final years of his tenure. "Proudly alone" was the motto of his final decade. For the Portuguese ruling regime, the overseas empire was a matter of national identity.

In order to support his colonial policies, Salazar adopted Gilberto Freyre's notion of Lusotropicalism, maintaining that since Portugal had been a multicultural, multiracial and pluricontinental nation since the 15th century, if the country were to be dismembered by losing its overseas territories, that would spell the end for Portuguese independence. In geopolitical terms, no critical mass would then be available to guarantee self-sufficiency to the Portuguese State. Salazar had strongly resisted Freyre's ideas throughout the 1930s, partly because Freyre claimed the Portuguese were more prone than other European nations to miscegenation, and only adopted Lusotropicalism after sponsoring Freyre on a visit to Portugal and its colonies in 1951-2. Freyre's work "Aventura e Rotina" was a result of this trip.

Salazar was a close friend of Rhodesian Prime Minister Ian Smith: after Rhodesia proclaimed its Unilateral Declaration of Independence from Britain, Portugal - though not officially recognizing the new Rhodesian state - supported Rhodesia economically and militarily through the neighbouring Portuguese colony of Mozambique until 1975, when FRELIMO took over Mozambique after negotiations with the new Portuguese regime which had taken over after the Carnation Revolution. Ian Smith later wrote in his The Great Betrayal that had Salazar lasted longer than he did, the Rhodesian government would have survived to the present day, ruled by a moderate black majority government under the name of 'Zimbabwe-Rhodesia'.

Salazar's goal was to establish a Catholic Social Order, wherein the state, government and social institutions would base its laws of right and wrong on what the Gospels and the Catholic Church teach is right and wrong. In this process, Salazar even dissolved Freemasonry in Portugal in 1935. Salazar, a former seminary student, was keen to leave the Catholic Church complete and entire liberty of action. He permitted the Catholic religion to be taught in all schools, not just parochial schools. (Non-Catholic parents who did not wish their children to receive this instruction could have their children removed from these classes, as the Catholic Faith was never forced on anyone); but throughout Portugal, the Catholic education of the youth was greatly favored. Another policy at this time was Salazar's legislation on marriage which read “The Portuguese state recognizes the civil effects of marriages celebrated according to canonical laws.” He then initiated into this legislation articles which frowned upon divorce. Article 24 reads, “In harmony with the essential properties of Catholic marriages, it is understood that by the very fact of the celebration of a canonical marriage, the spouses renounce the legal right to ask for a divorce.” The effect of this law was that the number of Catholic marriages went up. So that by 1960, nearly 91 percent of all marriages in the country were canonical marriages.

On July 4, 1937, Salazar was on his way to Mass at a private chapel in a friend's house in the Barbosa du Bocage Avenue in Lisbon. As he stepped out of the car, a Buick, a bomb exploded only 10 feet away (the bomb had been hidden in an iron case). The bomb-blast left Salazar untouched (his chauffeur was rendered deaf). The bishops argued in a collective letter in 1938, that it was an "act of God" that had preserved Salazar's life in this attempted assassination. Emídio Santana was the anarcho-syndicalist, founder of the Metallurgists National Union (Sindicato Nacional dos Metalúrgicos), behind the assassination attempt. The official car was replaced by an armoured Chrysler Imperial.

On May 13, 1938, when the bishops of Portugal fulfilled their vow and renewed the National Consecration to the Immaculate Heart of Mary, Cardinal Cerejeira acknowledged publicly that Our Lady of Fatima had, "Spared Portugal the scourge of Communism". After Portugal avoided the devastation of both the Spanish Civil War and the Second World War, Salazar's propaganda machine and the Catholic Church also connected this to a miraculous dimension which made them profit from the Catholic fervor of the masses. The Cristo-Rei, a Catholic monument in Almada, was inaugurated on 17 May 1959 by Salazar. Its construction was approved by a Portuguese Episcopate conference, held in Fátima on 20 April 1940, as a plea to God to prevent Portugal from entering World War II. However, the idea had originated on a visit by the Cardinal Patriarch of Lisbon to Rio de Janeiro in 1934, soon after the inauguration of the statue of Christ the Redeemer in 1931.

In 1968, Salazar suffered a brain haemorrhage. Most sources maintain that it occurred when he fell from a chair in his summer house. In February 2009 though, there were anonymous witnesses who confessed, after some research about Salazar's most well-kept secrets, that he had fallen in a bathtub instead of from a chair. There was a heated conflict between his personal physician, Eduardo Coelho, who realized an immediate operation was necessary and the first surgeon consulted who delayed doing anything. Finally another surgeon was found to do the operation. In any event, Salazar's incapacity forced President Américo Thomaz to replace him with Marcelo Caetano on September 27, 1968. It is believed that to his dying day Salazar thought that he was still Prime Minister of Portugal, although this has been disputed. He died in Lisbon on July 27, 1970.

Tens of thousands paid their last respects at the funeral and the Requiem Mass that took place at the Jerónimos Monastery and at the passage of the special train that carried the coffin to his hometown of Vimieiro near Santa Comba Dão, where he was buried according to his wishes in his native soil, in a plain ordinary grave. As a symbolic display of his views of Portugal and the colonial empire, there is well-known footage of several members of the "Mocidade Portuguesa," of both African and European ethnicity, paying homage at his funeral.

After Salazar's death, his Estado Novo regime persisted under the direction of one of his longtime aides, Marcelo Caetano. Despite tentative overtures towards an opening of the regime, Caetano balked at ending the colonial war, notwithstanding the condemnation of most of the international community. Eventually the Estado Novo fell in April 25, 1974, after the Carnation Revolution. Some factions, including Álvaro Cunhal's PCP, unsuccessfully tried to turn the country into a totalitarian communist state. The retreat from the colonies and the acceptance of its independence terms which would create newly-independent communist states in 1975 (most notably the People's Republic of Angola and the People's Republic of Mozambique) prompted a mass exodus of Portuguese citizens from Portugal's African territories (mostly from Portuguese Angola and Mozambique), creating over a million destitute Portuguese refugees — the retornados.