As prime minister, he generally tried to continue the moderate conservative policies of his predecessor, István Bethlen, although with less success.

After the war he returned to his estate, but the country's situation was chaotic: his cousin, Mihály Károlyi led the Aster Revolution and the Austro-Hungarian Monarchy collapsed.

The adjacent countries (Romania, and Czechoslovakia) took advantage of this to gain even more territory: the Romanians occupied Transylvania and the Partium in Spring 1919.

Károlyi reorganized his government here with the goal of ending communist rule and on 12 July 1919 Dezső Pattantyús-Ábrahám became its prime minister.

Károlyi's Minister of War was Admiral Miklós Horthy, who set up the National Army; these two politicians began to be friends.

He undertook a bigger role in the politics during the Great Depression, becoming Minister of Foreign Affairs for a short time in the cabinet of István Bethlen, following Lajos Walko.

He had also made a controversial statement: "Emotions, reason, and the threads of interest bind Hungary to France", which brought him some notice in the French press.

The Ministry of Finance reduced the pay of state employees: railwaymen, postmen, clerks, soldiers, gendarmes, members of the river forces, and customs workers.

When Szilveszter Matuska blew up a portion of the Biatorbágy bridge near Budapest on 13 September 1931, causing the engine and nine of the eleven coaches of the Vienna Express to plunge into a ravine 30 meters deep, Gyula Károlyi issued two orders imposing martial law.

Imre Sallai and Sándor Fürst, leaders of the Communist movement, were arrested and executed in 1932 after a show trial.

These groups turned against the Prime Minister when they saw no actual results, and these failures led Bethlen to call for Károlyi's resignation in September 1932.