From the late 1880s onwards Lueger was a regular attendee at the influential circles of clerical social conservative politicians around Karl von Vogelsang. In view of the rising labour movement, the participants on the basis of Catholic social teaching developed ideas to overcome social polarisation by several measures of social security legislation and the common Catholic faith. Morevover, after a 1882 electoral reform had expanded the electorate suffrage, Lueger focussed on petty bourgeois tradespersons, who assumed the Jewish competition to be the underlying cause of their precarious situation, and discovered that raising the "Jewish Question" earned him enormous popularity.

In 1893 he founded and led the Christian Social Party (CS), which quickly rivaled with the Social Democrats for the majority of votes. After the 1895 elections for the Vienna Gemeinderat it took political power from the ruling liberals and subsequently helped Lueger win the mayoralty. It did however take him two more years to prevail against the resistance of Prime Minister Kasimir Felix Badeni and three refusals by Emperor Franz Joseph (who allegedly loathed him as a person). After personal intercession by Pope Leo XIII his election was finally sanctioned in 1897.

Lueger served as mayor of Vienna until his early death from diabetes mellitus in 1910. His mortal remains were buried in the crypt of the newly erected St Charles Borromeo Church at the Zentralfriedhof (also called Dr. Karl Lueger Memorial Church), whose groundbreaking ceremony he had performed himself.

He was a zealous Catholic, and wished to “capture the university” for the Church. He would have neither Social Democrats nor Pan-Germans nor Jews in the municipal administration. He secured good treatment for Czech immigrants.

In his incumbency, Lueger is credited with the extension of the public water supply by its second main aquafer (Hochquellwasserleitung), which provides tap water of mineral water quality to large parts of the city. He also pursued the municipalization of gas and electricity works as well as the establishment of a public transport system and numeorus institutions of social welfare, most of which strongly relied on debt financing.

He planned to make Vienna one of the most beautiful of garden cities.

A bachelor throughout his life, der schöne Karl ("handsome Karl") achieved tremendous popularity among the citizens. During his tenure, Vienna ultimately changed its appearance as the capital of a great power of the pre-World War I era - an heritage that remained even in Red Vienna after the dissolution of Austria - Hungary in 1918. A significant part of the infrastructure and organisations that are responsible for the high standard of living in the contemporary city were created during his terms of office.

Lueger was known for his anti - Semitic rhetoric and referred to himself as an admirer of Edouard Drumont, who founded the Antisemitic League of France in 1889. Decades later, Adolf Hitler, a Vienna citizen from 1907 to 1913, saw him as an inspiration for his own virulent hatred of anything Jewish. Though not an explicit pan-Germanist, Lueger advocated racist policies against non-German speaking minorities in Austria - Hungary and in 1887 voted for a bill proposed by his long time opponent Georg von Schönerer to restrict the immigration of Russian and Romanian Jews. He also overtly supported the völkisch movement of Guido von List and created the nickname Judapest for the rivaling Hungarian capital. The historian Léon Poliakov wrote in The History of Anti - Semitism:

It soon became apparent that especially in Vienna any political group that wanted to appeal to the artisans had no chance of success without an anti - Semitic platform. [...] It was at that time that a well known phrase was coined in Vienna: "Anti - Semitism is the socialism of fools." The situation was exploited by the Catholic politician Karl Lueger, the leader of Austrian Christian - Social party with a program identical to that of the Berlin party of the same name led by Pastor Stoeker. In 1887, Lueger raised the banner of anti - Semitism. [...] However the enthusiastic tribute that Hitler paid him in Mein Kampf does not seem justified, for the Jews did not suffer under his administration.

Other observers contend that Lueger's public racism was in large part a pose to obtain votes, being one of the first who made use of populism as a political tool. Historian William L. Shirer wrote that "…his opponents, including the Jews, readily conceded that he was at heart a decent, chivalrous, generous and tolerant man. So there is not a lot of evidence to support his large effect on the views of Adolf Hitler." According to Amos Elon, "Lueger's anti - Semitism was of a homespun, flexible variety - one might almost say gemütlich. Asked to explain the fact that many of his friends were Jews, Lueger famously replied: 'I decide who is a Jew.' " Viennese Jewish writer Stefan Zweig, who grew up in Vienna during Lueger's term of office, recalled that "His city administration was perfectly just and even typically democratic."

His general style of politics later inspired some of the right wing leaders of the First Austrian Republic in 1918 - 1933, such as Ignaz Seipel, Engelbert Dollfuss and Kurt Schuschnigg, who led the Austrian society towards Austrofascism. Unlike with Hitler, he did not so much inspire antisemitism in them (none of these three were particularly anti - Semitic), but rather provided one important role model for their generally combative, unrelenting stance towards ideological political opponents, which ultimately proved to be detrimental to the cohesion of the Austrian state.

In Vienna, Lueger has a square and a section of the Ringstraße named after him, and at least two statues were erected in his honour. It has been very difficult to decide what to do with monuments honoring historical figures whose reputation has been widely called into question as Europeans (and others) reflect on the historical background to the holocaust. With the Anschluss of Austria in 1938 street names carrying Jewish names or the names of pacifists were changed. After World War II, Austria started a full scale program of de-Nazification on both cultural and topographical levels. Nazified street signs were torn down and their names changed back from Nazi to Habsburg heroes. Lueger's monuments present a difficult case because they are genuinely local, yet he was inspirational for the Nazis.

For some, the Lueger monuments show that Vienna has sacrificed its obligations to war crimes victims in exchange for keeping its nostalgic appeal as the grand Imperial City. For example, when Austrian born neurobiologist Eric Kandel won the Nobel Prize in 2000, he "stuck it to the Austrians" by saying it was certainly not an Austrian Nobel, it was a Jewish - American Nobel. After that, he got a call from then Austrian president Thomas Klestil asking him, "How can we make things right?" Kandel said that first, Doktor - Karl - Lueger - Ring should be renamed. Kandel was offended that the address of the University of Vienna is on that street.