He lost an election to serve a full term as governor to former Office of Management and Budget director Mitch Daniels on November 2, 2004.

[2] Kernan joined the United States Navy in 1969,[3][5][6][8][10] and served as a Naval Flight Officer aboard the carrier USS Kitty Hawk.

[3][5][6][8][10] After he completed Naval Flight Officer training, reconnaissance training, & RA-5C Vigilante Replacement Air Group training, he served with RVAH-7 at Naval Air Station Albany, Georgia, until deploying to Southeast Asia aboard the aircraft carrier USS Kitty Hawk, where he served (flying 26 missions over Laos and North Vietnam) from February 1972 until a two-seat fighter plane he was serving as a weapons officer on was shot down by enemy forces while on a reconnaissance mission over North Vietnam and Kernan was detained as a prisoner of war on May 7, 1972.

[5][16] In 1975, after having completed his Naval service, Kernan worked for Procter & Gamble in Cincinnati, supervising the manufacturing of Camay, Safeguard, and Zest products.

[22] Following his tenure as South Bend Controller, Kernan held his jobs as vice president and treasurer of MacWilliams Corp until he ran for mayor in 1987.

[40] The loss of $20 million annually in federal funds which the city had received prior to Reagan and Bush budget cuts to urban programs had taken its toll on South Bend's infrastructure.

[42] In 1993, Kernan testified before congress that this move had been partially responsible for a 73% increase in ridership from South Bend, attributing this to the fact that the previous location of the station was in an area, "isolated and very difficult and perceived to be unsafe" [42] Plans to move the South Shore Line station to the airport, creating an air, bus, and rail intermodal terminal, had dated back to the 1970s.

[51] While Kernan was considered a strong prospective candidate among the possible Democratic contenders, commentator James Grass observed prior to Kernan making his decision not to run that, "to run a successful campaign," a Democratic nominee would likely need, "statewide name recognition, a good reputation, and the ability to raise lots of money.

He argued that failure to pass the proposal without a viable alternative would worsen federal legislative gridlock and hurt the chances of Clinton achieving his target of implementing a significant economic change.

[54][56] In 1988, taking advantage of a decline in interest rates, Kernan refinanced Coveleski Stadium through the newly created South Bend Redevelopment Authority.

[2][63] Others who had been rumored to have under consideration by O'Bannon for a running mate included Tom DiGuillio, Mike Gery, Baron Hill, John Walda, and Jill Long Thompson.

[26] O'Bannon had previously signaled that he was exploring choosing a running mate from Northern Indiana in order to provide that geographic benefit.

[27][68] Kernan involved St. Joseph Democratic Party Chairman Butch Morgan and South Bend City Council President Roland Kelly in the interviewing of prospective successors.

[74] During Kernan's tenure at the head of Indiana's Department of Commerce, the state recorded what were the second-highest export numbers in its history in the second quarter of 1998.

This included hiring Marshall Michael Carrington to conduct a thorough probe of the Indiana Bureau of Motor Vehicles, and appointing Cheryl Sullivan to head the Family and Social Services Administration.

[83] Kernan was credited with strengthening the cabinet style of government of Indiana's executive branch, which had dissipated in its functionality in the later years of O'Bannon's tenure.

[81] During his governorship, the state struggled with budget deficits and job losses, which Republicans faulted Kernan for, but which Democrats blamed on the lingering aftermath of the early 2000s recession and the dot-com bust.

[85] Under this program, they created a working group to review how the state of Indiana deals with purchasing goods and services, and to provide recommendations to adjustments.

[86] In January 2004, Kernan announced the Early Learning Trust, which was an initiative with the goal of providing every child in Indiana with access to voluntary full-day kindergarten by the year 2007.

[86] Changes were made to HoosierRx to allow senior citizens twice the discount when it was utilized in conjunction with the new federal Medicare prescription drug benefit.

[82] In December 2002, whilst lieutenant governor, despite previous widespread anticipation that he would seek the governorship,[77] Kernan made the surprise announcement that he would not run in the 2004 election.

Daniels criticized Kernan's proposals, characterizing them as fiscally irresponsible, claiming, "The gap between the cost and the available funds in the Indiana Department of Transportation's budget is more than $3 billion in the next six years.

[105] In October 2008, Kernan and Shepherd co-authored an op-ed urging voters to vote to abolish assessor positions in their townships in the November elections.

[116] At the press conference, Kernan levied the possibility that he would work to help remove problematic members of the council from office in the 2015 election.

[116] Immediately after, in comments to the South Bend Tribune, Kernan criticized Common Council Vice President Derek Dieter as being "poison in the well", alleging that he had been "behaving like a bully".

[120] During the 2016 United States presidential election, Kernan appeared in a Priorities USA Action-funded television advertisement criticizing Republican nominee Donald Trump as "unfit to be president.

[122] In 2017, along with Republican former Ohio Governor Bob Taft, Kernan co-authored an op-ed arguing in favor of abolishing the death penalty for mentally ill criminals.

[82] On July 8, 2020, Kernan's family announced that he had been diagnosed with Alzheimer's disease several years earlier, and was living in a care facility in South Bend.

He responded to criticisms of this feeding into a race to the bottom by declaring, "I understand the argument that taking jobs away from Boston and putting them here is nationally a zero-sum game.

[136][137] In 2017, along with Republican former Ohio Governor Bob Taft, Kernan co-authored an op-ed arguing in favor of abolishing the death penalty for mentally ill criminals.