Mukherjee was elected as a member of the Rajya Sabha in July 1969 and was re-elected in 1975, 1981, 1993 and 1999. He rose through a series of cabinet posts to become the Finance Minister of India in 1982. He served as the Finance Minister of India from January 1982 to December 1984.
Mukherjee was also the president of West Bengal state unit of Congress in 1985. Later, he was also elected as the Deputy Chairman, Planning Commission from June 1991 to May 1996. He served as External Affairs Minister for the first time in the then prime minister P V Narasimha Rao's cabinet from 1995 to 1996. After the 2004 General Elections he is the Leader of House, Lok Sabha.
Mukherjee headed Group 24 - a Ministerial Group attached to IMF and World Bank - in 1984. He has also been a member of the Board of Governors of the IMF (1982-85), World Bank (1982-85), Asian Development Bank (1982-85) and African Development Bank (1982-85). He has been rated as one of the best five Finance Ministers of the World for the year 1984 according to a survey of Euro Money -a journal published from New York. Between May and November 1995, he presided over the SAARC Council of Ministers Conference.