At the age of 17, Lyons became a teacher in the Education Department and was elected a Labor member of the Tasmanian House of Assembly in 1909. As Tasmania's first Labor premier (1923–28), he sponsored bills to encourage industry and to provide welfare benefits for public employees. He was elected to the Australian federal Parliament in 1929 and served as postmaster general and minister for public works and railways until 1931, when he resigned to lead the newly formed United Australia Party to victory in the elections.

Lyons' ministry benefited from worldwide economic recovery and achieved a government surplus in 1934, along with a continuing decline in unemployment and diversification of industry. Concerned about European instability and Japanese aggression in China in the mid-1930s, he sponsored expansion of the nation's military forces. His government gave some aid to cultural activity, scientific research, and public health. Lyons died in office. His wife, Dame Enid Lyons, continued a public career and became the first woman to hold ministerial office in Australia.