In 1988, Khazei and his then–Harvard roommate Michael Brown founded City Year, a non-profit organization that offers 17- to 24-year-olds the opportunity to engage in 10 months of full-time community service.

Khazei and Brown envisioned that a year of national service could become a commonplace bridge between high school and college.

[8] President George H. W. Bush appointed Khazei as vice-chair of the Commission on National and Community Service from 1990 to 1992.

[8][10] In 2008, Khazei organized ServiceNation, a summit event held in New York City on September 11, 2008 that featured then-presidential candidates Barack Obama and John McCain alongside over 700 other national service leaders.

[12][13] Khazei penned an article featured on The Huffington Post in April praising President Obama's signing of the new law, emphasizing the importance of "Big Citizenship over Big Government" and calling for a "New Patriotism" that looks to entrepreneurs and innovators in both the private and social sectors, forming new partnerships among government, the private sector, and the non-profit sector, all while taking advantage of modern technological advances that empower citizens and make government more effective and efficient.

[16] From 2012 to 2015, he served as the co-chair of the Leadership Council of the Franklin Project, a policy program of the Aspen Institute that sought to make a year of service a common opportunity and expectation for young Americans.

He has also served on the advisory boards of the Ad Council, America's Promise, the Leadership Council of Boston Medical Center, the Center for Public Leadership at the John F. Kennedy School of Government, and the Partnership for Public Service.

Additionally, he founded Democracy Entrepreneurs, which promotes new change agents who are inventing new ways to engage people in our democracy, and Be the Change, Inc., a Boston-based group dedicated to building national coalitions of non-profit organizations and citizens that promoted advancing issues of national service, fighting poverty and empowering veterans.

In November 2009, The Boston Globe endorsed Khazei for Senate, writing: "With high hopes, the Globe endorses Alan Khazei, the prime mover behind national-service policies, as Massachusetts' best chance to produce another great senator.

[19] On April 26, 2011, Khazei announced that he would be a candidate in the 2012 U.S. Senate election, looking to unseat Republican incumbent Scott Brown.

[20] In response to the entry on September 15 of Harvard law professor Elizabeth Warren into the Senate campaign, Khazei issued a direct challenge to the other Democratic candidates—and specifically to Warren—to forego campaign funds from corporate lobbyists and all Political Action Committees.