Katō's first job was with the great Japanese cartel of Mitsubishi, which backed him throughout his political career; he, in turn, watched over its interests. In 1887 he became private secretary to the minister of foreign affairs, Ōkuma Shigenobu, and subsequently served as director of a bureau in the finance department. After acting as Japanese ambassador to England (1894–99), Katō served as minister of foreign affairs for a few months in 1900 and again in 1906. He resigned in opposition to the nationalization of the railways, which hurt the Mitsubishi interests, and remained out of office until 1908, when he was reappointed ambassador to London. Recalled in 1913, he became foreign minister for the third time, in the short-lived cabinet of the unpopular new prime minister, Katsura Tarō (Katsura Tarō, Kōshaku). Katō then reorganized the Constitutional Association of Friends (Rikken Dōshi-kai), created by Katsura, and renamed the party the Constitutional Party (Kenseikai), of which he became chairman in 1913. Under Katō's leadership, the Constitutional Party became the major opposition to the more conservative Friends of Constitutional Government Party (Rikken Seiyūkai).

In April 1914 Katō again took over the foreign ministry under his old patron Ōkuma. During his incumbency, on Jan. 18, 1915, Japan sent the so-called Twenty-one Demands to China, resulting in greatly increased privileges and industrial rights there for Japan. After the March election, Katō resigned in protest of Ōkuma's corrupt tactics at the polls.

The following decade proved a quiet period for Katō, but in June 1924 he became prime minister of a new coalition government. His party won a majority in the Diet in 1925, and Katō was able to name his own cabinet. A new period of democratic government began: universal male suffrage was enacted, the army was greatly reduced in size and influence, the power of the House of Peers was lessened, and moderate social legislation was introduced. Other legislation enacted by Katō's government included an antisubversive measure that provided prison terms of up to 10 years for membership in any group advocating a change in the Japanese “national polity” or proposing the abolition of private property. Military training was introduced in middle and higher schools, and the army was modernized. Katō died before the end of his term.