From 6 August 1917 to 9 July 1918, he served as Germany's State Secretary for Foreign Affairs, and led the delegation that negotiated the Treaty of Brest-Litovsk, which removed the Russian Empire from World War I in March 1918.

He negotiated treaties on future division of African colonies and an agreement on the Bagdad Railway project with the British government which could have led to longterm improvement of German-British relationship.

In December 1917 von Kühlmann explained the main goals of his diplomacy was to subvert and undermine the political unity of the enemy states: He also negotiated the Peace of Bucharest of 7 May 1918, with Romania.

In the treaty negotiations, Kühlmann encountered opposition from the higher command of the army, and, in particular, of Erich Ludendorff, who desired fuller territorial guarantees on Germany's eastern frontier, the establishment of a German protectorate over the Baltic States and stronger precautions against the spread of Bolshevism.

He was essentially dismissed from office by the Chancellor, Georg von Hertling, in a speech notionally intended to explain away his statement and, after an interview with Emperor Wilhelm II at the front, he tendered his resignation in July 1918.