Following expulsion from his party PASOK, he received a one-year suspended sentence for misdemeanours over his handling of the infamous “Lagarde list”.

In 1998, Papakonstantinou returned to Greece and was appointed an adviser to then-Prime Minister Costas Simitis on "information society" issues.

In September 2007, he was elected member of the Hellenic Parliament to represent the district of Kozani,[2] and was subsequently appointed PASOK's Press Spokesman in March 2008.

During his tenure, he overhauled the budget process, instituting a medium-term fiscal framework with expenditure monitoring and assessment mechanisms, and an independent statistical authority; embarked on tax reform, with legislative and organizational changes to combat tax evasion; implemented a wide-ranging program of structural reforms in product, service and financial markets; and designed a large-scale and wide-ranging privatization strategy.

When he left office, the public deficit was more than 6 percentage points of GDP lower than upon his appointment, while Greece had recovered half the competitiveness lost since Eurozone entry and was named the OECD country with the fastest pace of structural reforms.

Following the elections, Papakonstantinou has faced a parliamentary investigation into the handling of the so-called Lagarde list, containing information on the deposits of roughly 2,000 Greek citizens at HSBC bank's Geneva branch, which he asked for and received from French authorities in 2010.

[5] He has consistently denied all charges and claims he is being made a scapegoat for the inaction of others on this issue as well as for the public's need to punish politicians for the austerity policies in Greece.