He had shown patriotism during the freedom struggle as a student and, thus, displayed a remarkable political consciousness even at an early age.

He was the Minister of State (with independent charge) of the Ministry of Road Transport and Highways from 2000 to 2003 in the Union government headed by Atal Bihari Vajpayee.

In February 2007, he led the BJP to victory in the assembly elections in Uttarakhand and was subsequently chosen to be the new Chief Minister of the state.

Among Khanduri's first accomplishments as Chief Minister was to cut expenses by reducing his own security and that of politicians and administrative officials, cutting back on their allowance for foreign trips and restricting the use of the Chief Minister's discretionary fund to the projects approved by the district magistrates.

Following his election, he toured the entire state to gain first hand information about the conditions of the people.

The Uttarakhand Government approved the draft of the Lokayukta Bill, bringing within its ambit all the ministers, including the Chief Minister, the MLAs and the government servants including IAS and IPS officers, with a provision of life imprisonment or more severe punishment.

He is also associated with other organisations in various capacities including Purva Sainik Seva Parishad (Uttar Pradesh), Parvatiya Sanskriti Parishad in Dehradun, Govind Ballabh Pant Himalaya Environment and Development Committee and the Wild Life Society of India He was also the chairperson of the Uttaranchal Pradesh Sangarsh Samiti.

Khanduri too lost his election from Kotdwara constituency and tendered his resignation to the governor of Uttarakhand on 7 March 2012.