
Februari 1980, dia mendirikan Partai Buruh (PT: Partido dos Trabalhadores). Meskipun berteman dengan Presiden Kuba, Fidel Castro dan Presiden Venezuela, Hugo Chavez, ia tidak memilih ideologi komunis untuk partainya. Ia lebih suka menggabungkan anggota-anggota militan serikat buruh, intelektual, aliran sosialis Trotsky, dan aktivis Teologi Pembebasan dari gereja di dalam partainya. Landasan ini membuat Partai Buruh yang dipimpinnya lebih dikenal sebagai sebuah partai beraliran sosial demokrat yang memiliki kebijakan pragmatis daripada revolusioner.
Tahun 1986, ia terpilih ke Kongres dan mencalonkan diri sebagai presiden pada tahun 1989. Pemilu tahun itu menempatkan Fernando Collor de Mello sebagai presiden. Lula da Silva yang memperoleh 31 juta suara hanya kalah 6% dengan Fernando Collor de Mello pada babak kedua. Langkah ini diulang pada tahun 1994. Ia pun masih kalah dengan Fernando Henrique Cardoso. Baru pada upayanya yang keempat (Oktober 2002), ia memperoleh mandat rakyat. Ia memilih industriawan Jose Alencar dari Partai Liberal sebagai wakil presiden.
Ia memanfaatkan gelombang ketidakpuasan rakyat pada masa ekonomi macet, pengangguran meningkat, dan jurang antara kaya dan miskin yang tetap lebar. Sehingga, ia menjadi presiden kiri pertama yang berasal dari kelas pekerja. Ia tidak menguasai bahasa asing dan mencoba mengenal dunia internasional. Dengan 61% suara yang diperolehnya cukup menegaskan bahwa ia pemimpin yang mampu mencerahkan harapan. Satu hal yang pasti, kandidat Partai Sosial Demokrat (Jose Serra) telah dikalahkan dalam pemilu presiden. Dan, Luiz Inácio Lula da Silva resmi menjabat sebagai Presiden Brasil sejak 1 Januari 2003.

The introduction of social programs, such as Bolsa Família and Fome Zero were hallmarks of his time in office. As president, Lula played a prominent role in international matters, including activities related to the nuclear program of Iran and global warming, and was described as "a man with audacious ambitions to alter the balance of power among nations." Succeeded by his former Chief of Staff, Dilma Rousseff, he left an enduring mark on Brazilian politics in the form of Lulism. Lula has been called one of the most popular politicians in the history of Brazil and while in office was one of the most popular in the world. He was featured in Time's 2010 The 100 Most Influential People in the World,[13] and Perry Anderson called him "the most successful politician of his time."[14] In October 2011, Lula—who was a smoker for 40 years[15]—was diagnosed with throat cancer and underwent chemotherapy, leading to a successful recovery.
In early 2016, Lula was appointed Chief of Staff under Rousseff, but Justice Gilmar Mendes of the Supreme Federal Court blocked the appointment due to ongoing federal investigations. On 12 July 2017, he was convicted of money laundering and passive corruption, defined in Brazilian criminal law as the receipt of a bribe by a civil servant or government official. He was sentenced to nine years and six months in prison by judge Sérgio Moro but remained free pending an appeal of the sentence. On 24 January 2018 the Regional Federal Court of the 4th Region, which is a panel of three appellate judges, unanimously upheld Moro's ruling against Lula and increased the sentence to 12 years.
On 5 April 2018, the Supreme Federal Court voted to reject Lula's habeas corpus plea; on the same day a warrant was issued for his arrest. He turned himself in and began serving his sentence on 7 April 2018. Lula has announced his candidacy for the 2018 presidential election, but he is widely expected to be disqualified under Brazil's "Clean Record" law, which bars those convicted of crimes and whose sentences have been affirmed by an appellate court, from running for public office.