He was demoted when Menelik's health detoriated and affairs was nominally ruled by Lij Iyasu.

Tessema Nadew, regent of Ethiopia, reappointed Mulugeta as dejazmach over Gimira to the west Jimma.

While governor of Illubabor, Mulugeta escorted then Ras Tafari (the later Emperor Haile Selassie) on his tour of Europe in 1924.

[4] In 1926, he was appointed as Minister of War, and a few years later commanded the loyalist troops to victory at the Battle of Anchem.

During the Second Italo-Ethiopian War, Mulugeta was appointed Imperial Commander of the Vanguard (Fitawrari) to replace the disgraced Birru Wolde Gabriel.