Before the independence of India, he became Bombay's Home Minister and later was elected as Chief Minister of Bombay State in 1952. The state was home to Marathi linguistic movements, with calls for the creation of a separate linguistic state. Considered as a tough leader, Desai was also known for pioneering beliefs and enforcing strict discipline and authority and thus possessed a radical mindset. By Desai's orders in 1960, a demonstration by the Samyukta Maharashtra Samiti was fired upon by the police resulting in the deaths of 105 demonstrators. The ensuing public outrage shook the central government. The incident led to the formation of the present State of Maharashtra.

As Home Minister, Desai outlawed any portrayals of indecency (which included "kissing" scenes) in films and theatrical productions. Although a staunch Gandhian, Desai was socially conservative, pro-business, and in favour of free enterprise reforms, as opposed to Prime Minister Jawaharlal Nehru's socialistic policies.

Rising in Congress leadership, Desai was at odds with Prime Minister Nehru and his allies, and with Nehru's age and health failing, he was considered as a possible contender for the position of Prime Minister. Outflanked in the leadership contest after Nehru's death in 1964 by the Nehruvian Lal Bahadur Shastri, Desai remained content to build support within the ranks. After Shastri's death in 1966, he contested for Prime Minister and fought a closely contested election with Indira Gandhi. Desai obtained 169 votes but lost to Indira Gandhi who garnered 351.

Morarji Desai led a fractious coalition government, and thus failed to achieve much owing to continuous in-wrangling and much controversy. With no party in leadership of the coalition, rival groups vied to unseat Desai. Controversial trials of prominent Congress leaders, including Indira Gandhi over Emergency-era abuses worsened the fortunes of his administration. Desai worked to improve relations with neighbour and arch-rival Pakistan and restored normal relations with China, for the first time since the 1962 war. He communicated with Zia-ul-Haq and established friendly relations and diplomatic relations were also re-established with China. His government undid many amendments made to the constitution during emergency and made it difficult for any future government to impose national emergency.

Since India's first nuclear test in 1974, Desai kept India's nuclear reactors stating "they will never be used for atomic bombs, and I will see to it if I can help it". In 1977, the Carter administration sold India, heavy water and uranium for its nuclear reactors but required American on-site inspection of nuclear materials. Desai declined, seeing the American stance as contradictory, in light of its own nuclear arsenal.

In 1979, Raj Narain and Charan Singh pulled out of the Janata Party, forcing Desai to resign from office and retire from politics at the age of 83. Desai campaigned for Janata Party in 1980 General Election as a senior politician but did not contest the election himself.

In retirement, he lived in Bombay, and died at the age of 99.

Kanti Desai, Morarji Desai's son, was often criticised for being corrupt and using his father's name as an influence, however, despite numerous attempts to uncover and at times fabricate evidence against the family, their critics were ultimately unsuccessful in their attempts to defame the Desai family. Even after Desai's retirement, the family was constantly hounded by people attempting to sabotage their name. Justice Chandrachud issued a court order for the family's eviction from their apartment in 'Oceana' Complex in Mumbai. Sharad Pawar, then Chief Minister of Maharashtra, provided them with permanent Govt Residence in Mumbai until Morarji Desai's death.

Morarji Desai was a strict follower of Mahatma Gandhi's principles and a moralist. Morarji Desai had described the Research and Analysis Wing (R&AW), India's external intelligence agency, as the praetorian guard of Indira Gandhi and had promised to stop all activities of the R&AW after becoming prime minister. He closed down much of the agency, and reduced its budget and operations. B. Raman, the former head of the Counter Terrorism Division of R&AW and noted security analyst, reveals that, in an unguarded moment, Morarji Desai indiscreetly told Pakistani President Zia ul-Haq that he was aware of Islamabad's nuclear schemes.

It is understood that Moshe Dayan was sent on a mission to intercede with Morarji Desai for permission to enable Israeli Tanker aircraft to land refuel and take off from an Indian Air Force base in Gujarat supporting a mission the Israeli's planned, to destroy Pakistani nuclear facilities, then coming up, as they had done at Osirak in Iraq. Dayan was disguised as a Sikh gentleman on a private visit for the purpose. The request was turned down and the mission did not materialise.

Morarji Desai was a true Gandhian follower, social worker, institution builder and a great reformer. He was the Chancellor of Gujarat Vidyapith (university established by Mahatma Gandhi). Even during his term as the Prime Minister he used to visit and stay at Vidyapith during the month of October. He exemplified simplicity and used to write post cards himself even when he held the office of Prime Minister. Sardar Patel deputed him to conduct meetings of farmers in Kaira district which finally led to the establishment of the AMUL Cooperative movement. During his rule, he withdrew intervention in Public Distribution System and rationing shops were literally lost due to cheap sugar and oil available in the market.