Gallagher became Chief Minister in 2011 after Stanhope's retirement, and led her party to a fourth consecutive term at the 2012 general election.

[11][12] She was initially employed as a social worker, assisting with a community life skills project and working with children with disabilities.

[15] Gallagher left her previous employment and was offered an administrative job at the Community and Public Sector Union (CPSU) where Seaman had worked.

[19] Gallagher was appointed to the second arrangement of the first Stanhope ministry on 23 December 2002,[20] when she was given the portfolios of education, youth and family services; women; and industrial relations.

A minor change on 26 May 2004 saw Gallagher's ministry for education, youth and family services divided into separate responsibilities.

[28] Amid allegations of bullying, it was reported in early 2010 that nine obstetricians had resigned from Canberra Hospital in the preceding 13 months.

Catholic Archbishop of Sydney, Cardinal George Pell claimed that the Government's motives were ideological and driven by anti-Christian elements.

[36] The culmination of these matters led the Liberal leader, Zed Seselja, on 17 August 2010, to move a no confidence vote in the Assembly against Gallagher as Minister for Health as follows:[37] That this Assembly no longer has confidence in the Minister for Health, Katy Gallagher, for her continued neglect of the Health portfolio, most particularly... management failure, staff bullying, over working, and poor processes; ... complete failure in the Calvary Hospital purchase; ... and many instances of attacking those who made complaints, ignoring those who gave advice, and dealing with the problems through denial and neglect; ... and the ongoing poor performance of the ACT health system ...The motion was defeated (five in favour, nine against), with the ACT Greens supporting the government.

[40] Gallagher is a supporter of same-sex marriage and on 22 October 2013, she oversaw the ACT becoming the first jurisdiction in Australia to pass a law allowing couples of the same sex to marry.

[42] During her term as Chief Minister, Gallagher welcomed The Queen during her 16th tour to Australia in October 2011[43] along with the Duke and Duchess of Cambridge in April 2014.

[48] She held those positions until 23 July 2016 when she was promoted to Shadow Minister for Small Business and Financial Services after the 2016 election.

Gallagher completed her Form RN declaration of renunciation of British citizenship on 20 April and the ACT Labor Party lodged it with the UK Home Office on 26 April, the court finding "Senator Gallagher retained that status until 16 August 2016, when her declaration of renunciation of that citizenship was registered by the Home Office of the United Kingdom.

"[5][53] After her disqualification from the Senate, Gallagher worked as a consultant at Calvary Hospital and joined the board of the RSPCA ACT division.

[57] In August 2021, she criticised the rollout of the vaccine program after her youngest daughter Evie tested positive to the virus.

[58] At the conclusion of the parliamentary term, the committee handed down its report which included recommending a royal commission into the government's handling of the pandemic.

She is the only holder of the Attorney-General portfolio to have had no prior legal experience, as she was appointed on the basis of holding the office for an interim period and act to "take care" of issues.

[69] The bill was introduced into parliament and passed the lower house on 3 August[70] and voted into law on 1 December with Gallagher managing the debate in the Senate.

[73] In January 2025 with the resignation of Bill Shorten from parliament, Gallagher was additionally sworn in as Minister for Government Services.