Carlisle was admitted to the Kentucky bar in 1858 and practiced law in Covington before his election to a term in the state legislature (1859–61); he also served in the Kentucky state senate (1866–71) and as lieutenant governor (1871–75). Carlisle, a Democrat, was elected to the U.S. House of Representatives in 1876; he championed tariff reduction and rose to the post of speaker (1883). In 1890 he resigned from the House to fill an unexpired term in the Senate.

In 1893 Pres. Grover Cleveland appointed him secretary of the treasury. Carlisle's hard-money policy during the depression that followed the Panic of 1893 was extremely unpopular in the growing free-silver wing of the Democratic Party. In 1896 he abandoned the party's nominee for president, William Jennings Bryan, champion of the free-silver movement, to support John M. Palmer, candidate of the National Democratic Party (Gold Democrats). As a result of this switch of allegiance, Carlisle lost popular support in his native Kentucky; from 1897 he practiced law in New York City.