Khamtay's involvement in Lao politics started as early as 1945. Driven by a strong sense of nationalism, he participated in Lao Issara (Free Laos), a movement opposed to French colonialism. During the nationalistic struggle that ensued, a split occurred between anti-western and royalist factions. Khamtay sided with the leftist, anti-western faction led by Prince Souphanouvong and Kaysone Phomvihane, and was soon entrusted with major military affairs of the LPRP. In 1954, Khamtay was appointed chief of staff of the Lao People's Liberation Army (LPLA) and later became its commander in chief.
During the 1960s and 1970s, primarily as the result of his military role and loyalty to the Pathet Lao leaders, Khamtay climbed to the upper echelon of the party hierarchy.
In 1972, he was appointed a member of the party's Central Committee. By December 1975, when the Pathet Lao had consolidated its control of the country, Khamtay was named minister of defense. In subsequent years, he gained even greater political power, eventually surpassing Prince Souphanouvong. In 1988, Khamtay was appointed secretary of the LPRP and positioned himself to become the successor to President Kaysone—the highest-ranking Lao politician. The army's success in a border war with Thailand further enhanced his national stature.
On 15 August 1991, the National Assembly approved Khamtay Siphandone as the new prime minister, succeeding Kaysone Phomvihane, who then became the nation's president. Khamtay's promotion was, in part, due to his long-term loyalty to the powerful Kaysone—a revolutionary hero in Laos. Khamtay and Kaysone were close partners since the 1940s, dating back to their involvement in the anticolonial struggle. In 1986, Kaysone introduced the New Economic Mechanism policy to allow free market forces to operate in the economy. This important new policy directive was enthusiastically endorsed by Khamtay, who played a major role in its implementation.