Aung Gyi was number two in the Union Revolutionary Council set up after the 1962 coup, serving as vice-chief of staff and minister of trade and industry until he was forced to resign on 8 February 1963 because of disagreements over economic policy with Ba Nyein and Tin Pe.

In his memoirs, Saturday's Son, published in 1974, U Nu, then prime minister of Myanmar, claimed that his handover of power to the caretaker government was not voluntary but that a group of army officers led by Brigadier Aung Gyi and Brigadier Maung Maung threatened him with a "straight military coup" should he refuse to handover power to Ne Win.

Aung Gyi was ousted in 1963, when he criticized the council's economic policies, and for statements made in Japan about the cause of the 1962 coup.

Prior to the 8888 Uprising, Aung Gyi had written several long open letters, widely distributed throughout the country, to Ne Win criticising the government, and they became an important factor for the opposition movement.

On 7 March 1988, Aung Gyi wrote his first letter to Ne Win, suggesting economic reforms and a new cabinet.

After the coup, Aung Gyi told people who came to listen his speech that they "must not think bad (or 'sin' against) the army even in your minds".

In 1998 he visited the United States and recorded an extensive interview with Radio Free Asia.

On 25 October 2012, Aung Gyi died at his home in Mayangone Township, Yangon, Myanmar, because of heart failure.