Satō held ministerial posts in the third and fourth Yoshida governments, including minister of the post office (1951–1952) and minister of construction (1952–1953). In 1953 he became director general of the Liberty Party (which merged with the Democratic Party in 1955 to become the Liberal Democratic Party), but he was forced to resign the position because of a ship-building company scandal during the fifth Yoshida cabinet in 1954. Satō subsequently became minister of finance during 1958–1960 under Prime Minister Kishi Nobusuke, Satō's elder brother by adoption.
In October 1964 Satō succeeded Ikeda Hayato as prime minister. During his seven years in office, Satō signed the 1965 Japan-Korea Treaty restoring normal diplomatic relations between the two countries and regaining control for Japan of the Ogasawara Islands in 1968. Although U.S. troops and bases remained on Japanese soil, Satō managed to negotiate a reversion of Okinawa to Japanese sovereignty in 1972.
Satō was less successful in establishing closer ties to either the Soviet Union or the People's Republic of China (PRC). Public outrage over his agreement to allow U.S. troops to remain on Okinawa ultimately forced his resignation in November 1972. He was awarded the Nobel Peace Prize in 1974 for his antinuclear diplomacy, an award that caused considerable controversy. Satō died in Chiyodaku, Tokyo, on 3 June 1975.
Reischauer, Edwin, O. The Japanese Today: Change and Continuity. Tokyo: Tuttle, 1988.; Schaller, Michael. Altered States: The United States and Japan since the Occupation. Oxford: Oxford University Press, 1997.