After Indonesia invaded the nascent nation on 7 December 1975, Alkatiri and his colleagues were unable to return, and he established the headquarters of the Fretilin External Delegation in Maputo, Mozambique.

During the 24-year Indonesian occupation of East Timor, Alkatiri was a chartered surveyor (Angolan School of Geography), and lived in exile in Angola and Mozambique.

As Secretary-General of the Fretilin Party, which had received a large majority of the vote in Parliamentary elections the previous August, Alkatiri was chosen as the first Prime Minister of the newly independent nation.

[4] On the same day, East Timor's chief of police Paulo Martins called for Alkatiri to be arrested for conspiracy to murder his political opponents.

"[1] The 'hit squad' accusations against Alkatiri were subsequently rejected by a UN Commission, which criticised Gusmão for making inflammatory statements during the crisis, and called Police Chief Paulo Martins's abandonment of his post a 'serious dereliction of duty'.

[6] In the June 2007 parliamentary election, Alkatiri was re-elected to a seat in parliament; he was the second name on Fretilin's candidate list, after party president Francisco "Lu Olo" Guterres.

[7] Alkatiri said on 1 August 2007 that he would be Fretilin's candidate for prime minister, while criticising the record of his rival for the position, Gusmão, who had left the presidency and was elected to parliament at the head of a new party, the National Congress for Timorese Reconstruction (CNRT).