After the defeat of Germany, on 17 June 1945 Grotewohl was elected chairman of the central committee of the newly formed SPD in Berlin. Two days later, he signed a common working agreement with the German Communist Party (KPD). However, his proposal to form a union of both parties was rejected by KPD leaders for tactical reasons. When the KPD, under intense Soviet pressure, changed its stance in September 1945 and began to effect a rapid merger, it found the SPD split on the issue. At a joint conference of thirty representatives of each party in Berlin on 20–21 December 1945, the first so-called Sixties Conference, the majority of Social Democrats, including Grotewohl, voted for the merger but on the precondition that the fusion had to be carried out nationwide. This proposal was strongly rejected by Kurt Schumacher, leader of the Western German SPD. Grotewohl, despite initial hesitation, finally agreed to the merger under enormous pressure from the Soviets, the KPD, and major elements of the Eastern German SPD.
Because of Schumacher's resistance, however, the new Socialist Union Party (SED) could only be created in the Soviet zone and in East Berlin in April 1946. Both Grotewohl and Wilhelm Pieck became joint SED chairmen, an arrangement that only lasted until 1954. As a member of a subsequent Sixties Conference and of a study commission to establish the SED party program, Grotewohl soon turned into a radical critic of social-democratic ideas and a strong supporter of Soviet-style socialism. From 1946 to 1950, he was a member of the Saxon Diet. After 1947, he supported the creation of an East German state and was a member of the permanent committee of the German People's Congress, a member of the German People's Council, and finally, from 1948 until 1949, chairman of this council's constitutional committee.
After East Germany was founded in October 1949, Grotewohl joined the Volkskammer (parliament) and was elected minister-president (retitled in 1950 as chairman of the council of ministers), a position he kept until his death in September 1964. His influence steadily declined, with Walter Ulbricht becoming the prominent leader of East Germany. Beginning in September 1960, after the death of President Pieck, Grotewohl was one of the deputy chairmen of the newly created State Council. Despite a severe illness, which began in November 1960, he remained in office but was no longer actively involved in political decision making. Grotewohl died in East Berlin on 21 September 1964.
Banchoff, Thomas F. The German Problem Transformed: Institutions, Politics, and Foreign Policy, 1945–1995. Ann Arbor: University of Michigan Press, 1999.; Fulbrook, Mary. Anatomy of a Dictatorship: Inside the GDR, 1949–1989. Oxford: Oxford University Press, 1995.; Grotewohl, Otto. Towards a Peaceful, Democratic and Socialist Germany. Berlin: Deutscher Zentralverlag, 1960.