Lindsey previously served as a member of the Federal Reserve Board of Governors from 1991 to 1997, nominated to position by President George H. W. Bush.

Additionally, Lindsey was chairman of the board of the Neighborhood Reinvestment Corporation, a national public/private community redevelopment organization, from 1993 until his departure from the Federal Reserve.

From 1997 to January 2001, Lindsey was a resident scholar and holder of the Arthur F. Burns Chair in Economics at the American Enterprise Institute in Washington, D.C.

In contrast to Chairman Greenspan, Lindsey argued that the Federal Reserve had an obligation to prevent the stock market bubble from growing out of control.

On September 15, 2002, in an interview with The Wall Street Journal, Lindsey estimated the high limit on the cost of the Bush administration's plan in 2002 of invasion and regime change in Iraq to be 1–2% of GNP, or about $100–$200 billion.

[5][6] Mitch Daniels, Director of the Office of Management and Budget, discounted this estimate as "very, very high" and Defense Secretary Donald Rumsfeld stated that the costs would be under $50 billion.

[7] As of 2007 the cost of the invasion and occupation of Iraq exceeded $400 billion, and the Congressional Budget Office in August 2007 estimated that appropriations would eventually reach $1 trillion or more.

He led the economic team for then Governor George W. Bush's successful presidential campaign in 2000, earning the trust of the future President who said at the time "I am very fond of Larry Lindsey and I value his advice".

[12] In April 2016, Lindsey endorsed Ted Cruz's campaign in the Republican presidential primary over his only remaining opponent, Donald Trump.