In 1902 Arundale and his aunt moved to Varanasi, where he took a position as history teacher at the Central Hindu College (CHC).

In 1912 Arundale gave a speech in Adyar to the Theosophical Society which inspired the founding of St Christopher School in Letchworth Garden City where it still operates under its founding principles During the early 20th-century, many Theosophists believed in the imminent appearance of a messianic entity, the so-called Maitreya or World Teacher.

The Indian Independence Movement was picking up pace during these years, as was a revival of interest and pride in the ancient culture and philosophies of India.

In 1917, he was one of a group of Theosophists who, along with Annie Besant, organized the National University of India at Chennai, near the headquarters of the society.

In June the same year, Arundale was arrested along with Besant and Bahman Pestonji Wadia by the British authorities for having become involved in the Indian Independence Movement.

During his years in Adyar, Arundale came into contact with the family of Nilakanta Sastri, a fellow Theosophist, and fell in love with his daughter, Rukmini.

Following his wedding, he deemed it best to reside outside Chennai for a few years and accepted an offer from the Maharaja of Indore in central India to serve as the Commissioner of Education of that state.

One of his initiatives in Indore was to open a museum known as Navaratna Mandir which contained the biographies and memorabilia of great people from around the world to serve as an inspiration for young students.

When Rukmini expressed admiration for Pavlova's art and the desire to learn from her, the latter advised her to look instead to the classical traditions of India and work towards their revival.