During the early 1970s he was stationed in Santiago, Chile, and became known as the "Raoul Wallenberg of the 1970s" when he helped over 1,200 Chileans, hundreds of Cuban diplomats and civilians, and 67 Uruguayan and Bolivian refugees escape persecution by dictator Augusto Pinochet.

[3] As a diplomat in Nazi-occupied Norway, Edelstam saved the lives of hundreds of Jews and anti-Quisling freedom fighters.

[2] After the 1973 military coup against Chilean President Salvador Allende, the Cuban Embassy was under fire by tanks and Cubans were returning fire from the windows; Edelstam took a Swedish flag in hand and walked in front of the tanks as bullets hurled past.

[4][failed verification] After the incident, the Cuban Embassy in Santiago de Chile remained under Swedish protecting power for 18 years until 1991.

Due to his remarkable courage and moral integrity, Edelstam is today considered as a true modern-day hero among millions around Latin America, and particularly so among the hundreds of thousands of Chileans who were forced into exile by the dictatorial regime.

In 2019, he was portrayed by Mikael Persbrandt in Finnish-Chilean television series Invisible Heroes, depicting his efforts with chargé d'affaires of Finland Tapani Brotherus in saving refugees from Chile during the military coup.