During World War II, he was responsible for building homes for defense workers in the eastern United States including the construction of the residential town of Oak Ridge, Tennessee, where parts of the atomic bomb were being developed in the Manhattan Project.

After World War II, he joined American Community Developers to create Park Forest, a suburb south of Chicago.

Klutznick resigned his UN post two years later, contending that a failure to integrate political goals with economic and social needs undermined the effectiveness of international diplomacy.

He was among the American Jewish leaders to meet with President Dwight D. Eisenhower's Secretary of State John Foster Dulles to discuss Middle Eastern policy and events.

During negotiations that preceded the 1977 Camp David Accords, Klutznick met with Israeli leader Menachem Begin, Egyptian President Anwar Sadat, and Jimmy Carter, as well as other US administration officials.

In 1978, Klutznick initiated a commission headed by Guy de Rothschild to examine the economic implications of Arab-Israeli peace for Israel and the international Jewish community.

In 1975, he served on a "Middle East Study Group", sponsored by the Brookings Institution, which produced a report encouraging both Israeli and Arab concessions and active involvement by the US government.

In 1981, he travelled to Israel, Saudi Arabia, Jordan, Syria, Egypt and the West Bank as part of a private group to meet with leaders in government, education, military affairs, business and communications, as well as political dissidents.

The resulting "Seven Springs Report" attempted to provide a base of knowledge and understanding for the conduct of future negotiations and peace plans.

Klutznick had long-standing relationships with Vice-President Walter Mondale and U.S. Secretary of State, Cyrus Vance and his ties to the Carter administration were further strengthened by his significant role in Arab-Israeli peace talks.