In 1963, when he was 27 years old, Sanguinetti became a member of the Chamber of Representative for Montevideo. In 1964 he was a member of the Uruguayan delegation that participated in the establishment of the United Nations Conference on Trade and Development (UNCTAD) in Geneva.

In 1966 he served as a member of the drafting group and informer on Constitutional Reform and from 1967 he was a member of the advisory group of Colorado President Jorge Pacheco on affairs related to the Organization of American States (OEA). Later on, in 1969, Pacheco appointed him as Minister for Industry and Commerce, a position which he occupied until 1971, when he was appointed Head of the Uruguayan Trade Mission to the USSR. He also became Deputy Editor of Acción.

In March 1972, the new President, also from the PC Party, Juan María Bordaberry, brought him to the government once again as Minister for Education and Culture. That same year, Sanguinetti was a founding member of the National Commission for the Historical, Artistic and Cultural Heritage of the Nation.

The breach of the constitutional order by the Armed Forces in June 1973 deprived him of his positions in the Government and in the House of Representatives, where he had renewed his seat once again in 1971, as well as his position as Deputy Editor of Acción Newspaper – which was closed down – and President of the National Council of Visual Arts, to which he had been appointed in 1967. In 1976 he was prohibited from undertaking any political activity.

Considered at the time a progressive politician in political questions and more conservative in economic questions, Sanguinetti managed to rehabilitate the image of a party that included a great variety of ideological diversity, the more conservative sectors of which had supported the coup d’état in 1973. He immediately lifted the ban on political parties and leaders that had actively opposed the dictatorship and signed an amnesty for political prisoners.

Following the rejection of the constitutional project on 30 November 1980 and having had his political rights restored on 29 June 1981, Sanguinetti headed the PC delegation in the political party negotiations with the army in order to allow a peaceful and ordered transition to democracy. The negotiations ended with the signing of the Naval Club Agreement on 3 August 1984. In 1983 he was elected Secretary General of the Executive Committee of PC and in August 1984 he obtained the majority nomination for the presidential elections which were to be held later that year, putting an end to 12 years of dictatorship. Sanguinetti also received significant support for his candidacy from the ruling military.

During the following years, Sanguinetti worked as a journalist, working from a viewpoint that was critical of the de facto Government, in El Día Newspaper (1973–1981), Visión Newspaper (since 1974, as an opinion columnist, a collaboration which he has continued up until today), and in the weekly publication Correo de los Viernes (established by him in 1981 and edited until 1984), as well as in the promotion of cultural and sports activities as the President of the Regional UNESCO Centre for the promotion of books in South America (1975–1984) and Vice-President of the popular Peñarol Football Club.

On 25 November 1984, general elections were held. Sanguinetti won 31.2% of the votes, defeating the best PN candidate, Alberto Zumarán; thus on 1 March 1985 he was sworn in as president with a 5-year term substituting the temporary president, Rafael Addiego, who had in turn substituted the military president, Gregorio Álvarez, on the previous 12 February. The ceremony was attended by 72 foreign representatives as an expression of support from the international community towards that new era in Uruguayan politics. (At the time, Sanguinetti had been unwilling to participate in an office-conferring ceremony together with Álvarez, and thus the interim arrangement with Addiego was worked out with the agreement of the parties concerned, but in later years Álvarez found a not so unlikely defender in Sanguinetti, who argued that Álvarez’s legal troubles since the coming of the Broad Front government in 2005 were unnecessarily one-sided, since known former Tupamaro insurgents were being ignored by Uruguayan justice.)

In the economic area, Sanguinetti’s Government had the reduction of the USD $510 million foreign debt as one of its most important objectives. This is an enormous figure which is close to the level of national production. Likewise, Sanguinetti was an active member of the Support Group (Uruguay, Peru, Brazil and Argentina) of the Contadora Group (Mexico, Colombia, Venezuela and Panama), an informal consultative forum dedicated to exploring preventive measures against the expansion of armed conflicts in Central America, which, in December 1986 decided to merge with the so-called Group of Eight, which in turn was called the Río Group in October 1990 coinciding with its expansion to include Chile, Ecuador, Bolivia and Paraguay. Sanguinetti presided the II Group of Eight Meeting, in Punta del Este on 29 October 1988.

In his first presidential term, the Uruguayan economy, which had suffered from a deep depression until 1985, registered positive indicators with production growth, a reduction in inflation, stabilization of unemployment and an increase in exports. The confrontation with trade unions -which demanded separation from the IMF and non-payment of the national debt- was compensated with opening up agreements among political parties to strengthen the consensus between the parties in order to bring forward legislation which was in the general interest. The result of this consensus was the National Agreement which was signed on 1 April 1986 by PC, PN, the left-wing Broad Front (FA) and the conservative Unión Cívica (UC).

With respect to foreign relations, Sanguinetti re-launched relations with Spain and re-established contacts with communist countries. In the nearer geographic arena, on 26 May 1987, and as a colophon to several preparatory meetings, he signed the Montevideo Agreement with his colleague, Raúl Alfonsín. This agreement was decisive in giving an impulse to regional economic integration according to the objectives outlined in the South American Integration Association (ALADI).

Alfonsín had already been negotiating an ambitious agreement to dismantle tariffs in bilateral trade with the Brazilian José Sarney; now, Sanguinetti was included in an open field project that adopted a three-country shape and that gained impulse from the summit of the three presidents which the Uruguayan had organized in Colonia on 6 February 1988. With the inclusion of Paraguay, all this work led to the creation of the Southern Common Market (MERCOSUR) in 1991.

On 1 March 1990, Sanguinetti handed over the Presidency to Luis Alberto Lacalle, the PN candidate who had won the elections on 26 November 1989. Sanguinetti remained committed to journalism and to academic activities as well as to the internal politics of his party as the leader of the Batllist Forum, which had a Social Democratic ideology, the most important faction of PC along with Batllismo Unido, headed by Jorge Batlle.

Since 1990, he has also been President of the PAX Institute, an academic foundation for international action. He is likewise a member of the InterAcción Council – another forum for retired world leaders that centers its work on the elaboration of reports and studies offering advice on diverse areas of the international arena- as well as of the Council of Presidents and Prime Ministers of the Carter Center in Atlanta, Georgia. He is also a member of Washington D.C. based Western Hemisphere think tank, the Inter-American Dialogue.

In 1994 were held once again presidential elections on 27 November, which he won with 24.7% of the vote, beating Tabaré Vázquez of the Encuentro Progresista-Frente Amplio (EP-FA) coalition, the other PC candidates – Jorge Batlle and Jorge Pacheco – as well as the three PN candidates, the strongest of which was Alberto Volonté who received 14.9% of the vote.

In reality, Vázquez was the individual candidate who received most votes, but according to the Ley de Lemas still in force at the time, the winning candidate was to be the most voted candidate from the most-voted party or political grouping and not necessarily the most voted individual candidate (in practice this only affected the two biggest parties). This is what occurred on this occasion since the Colorado Party, adding the votes received by Sanguinetti, Batlle and Pacheco, received 32.3%, higher than the 31.2% received by the three PN candidates and the 30.6% received by Vázquez’s Broad Front. On 1 March 1995 Sanguinetti started out on his second presidential period as the third leader to be re-elected in the country’s history.

Since 1996 he has promoted the work of individuals from the political and intellectual world, including the former Colombian President Belisario Betancur, the former Spanish President, Felipe González, the former President of Chile, Ricardo Lagos and the former President of Brazil, Fernando Henrique Cardoso. This group is known as the Montevideo Circle.

This alliance framework allowed him to bring the budget through a parliament divided in equal parts between the three main groups each year until the end of his term along with the reforms of the Social Security Law –attacked by worker and pensioner organizations- as well as the constitutional reform. Guaranteed the backing of two-thirds of the parliament, this reform, which eliminated the almost hundred-year old Ley de Lemas, was supported by 50.45% of the votes and came into force on 14 January 1997.

The expansionist economic policy of his Government brought about a reduction in the recession of -1.8% which had been registered the previous year, partly due to a fall in exports, and gave way to high growth rates that didn’t generate inflation. The opposite is true in fact, this variable experimented a continuous fall until it reached around 6% in 1999. The positive results in trading and in key production sectors generated employment that gave way to improved salaries and pensions, a general increase in income that in turn increased investment and internal consumption.

This boom panorama was drastically affected by the Brazilian crisis of 1998-1999, which reduced the products it bought from Uruguay; Brazil was the destination of more than a third of total Uruguayan exports. This interdependence was created within MERCOSUR, whose IX, XIII and XVII summits were hosted by Sanguinetti, respectively on the 7 December 1995 in Punta del Este, 15 December 1997 in Montevideo, and, again, on 8 December 1999, also in Montevideo.

On 1 March 2000 his term as President ended and he handed over the Presidency to his colleague Jorge Batlle, who had won the elections on 28 November 1999.

In 2007, Sanguinetti was awarded the prestigious FCG International Award for a Lifetime Achievement by the Cristóbal Gabarrón Foundation from Spain (FCG International Awards).

Sanguinetti was a pre-candidate for the presidential primaries in June 2019 supported by the Batllistas political sector of the Colorado Party, and accompanied by some of his former trusted advisers, including former ministers and politicians from the Foro Batllista. In the primaries, he was second, being surpassed by Ernesto Talvi, who was proclaimed the presidential candidate of the PC. After being elected senator for the 49th Legislature in the general election of October 2019, Sanguinetti expressed his intention to collaborate from Parliament with the Multicolor Coalition during the first year, and then work on his activities as general secretary of the Colorado Party. He resigned his senatorial seat on October 20, 2020, announcing that he will begin a “full dedication” stage to his party. He resigned with former President José Mujica (2010-2015).