After Schleicher's army career, during the 1920s, he moved up steadily in the Reichswehr, the German army, becoming the primary liaison between the army and civilian government officials. He generally preferred to operate behind the scenes, planting stories in friendly newspapers and relying on a casual network of informers to find out what other government departments were planning. In this capacity, he headed up the Ministeramt or Office of the Ministerial Affairs. Although essentially a Prussian authoritarian in his views on order, discipline and the so-called decadence of the Weimar era, Schleicher also believed that the Army had a social function, that of an institution unifying the diverse elements in society. Interestingly, he was also opposed to policies such as Eastern Aid (Osthilfe) for the bankrupt East Elbian estates of his fellow Junkers. In economic policy, therefore, he was a relative moderate.

Schleicher became a major figure behind the scenes in the presidential cabinet government of Heinrich Brüning between 1930 and 1932, serving as an aide to General Wilhelm Groener, the Minister of Defence. Eventually, Schleicher, who established a close relationship with President Paul von Hindenburg, came into conflict with Brüning and Groener, and his intrigues were largely responsible for their fall in May 1932. By coincidence, his name translated from the German is "Sneaker" or "Creeper."

The new Chancellor, Franz von Papen, handpicked Schleicher as Minister of Defence. Schleicher was not as conservative as Papen, however, as evidenced in a 1932 radio address in which he bluntly announced his unambiguous opposition to either a military dictatorship or a puppet regime to be backed by military force. Eventually, Papen and Schleicher came into conflict, and when, following the November 1932 elections, the government could not maintain a working parliamentary majority, Papen was forced to resign, and Schleicher succeeded him as Chancellor of Germany.

Schleicher hoped to attain a majority in the Reichstag by forming a so-called Querfront, meaning "cross-front," whereby he would unify Germany's fractious special interests around a non-parliamentary, authoritarian but participatory regime. Thus, he reached out to the Social Democratic labour unions, the Christian labour unions and the left-wing branch of the Nazi Party, led by Gregor Strasser; Strasser, however, was already losing the internal power struggle with Hitler.

Although Schleicher made some initial progress, he was rebuffed by both sides. The ousted Papen now had Hindenburg's ear, because the latter was beginning to have misgivings about Schleicher's "cryptoparliamentarianism" and willingness to work with the SPD, which the old President despised. Papen was urging the aged President to appoint Hitler as Chancellor in a coalition with the Nationalist DNVP, or Deutschenationale Volkspartei (German National People's Party) who, together with Papen, would supposedly be in a position to moderate Nazi excesses. Unbeknownst to Schleicher, Papen was holding secret meetings with both Hitler and Hindenburg, who then refused Schleicher's request for emergency powers and another dissolution of the Reichstag. The President dismissed Schleicher, calling Hitler into power on 30 January 1933. In the following months, the Nazis issued the Reichstag Fire Decree and the Enabling Act, transforming Germany into a totalitarian dictatorship.

In his last months, Schleicher was instrumental in attempts to negotiate the return of the House of Hohenzollern. Fearing this would lead to his overthrow and the collapse of his regime, Hitler had considered Schleicher a target for assassination for some time. When, on 30 June 1934, the Night of the Long Knives occurred, Schleicher was one of the chief victims. While in his house, he was gunned down; hearing the shots, his wife came into the room, whereupon she was also shot. His stepdaughter was the one who found the bodies. In his speech to the Reichstag on July 13 justifying his actions, Hitler denounced Schleicher for conspiring with Ernst Röhm to overthrow the government.