After the civil war De Valera led the Republican opposition to the pro-treaty government of William T. Cosgrave. In 1926 he broke with the extreme Republicans and founded a constitutional opposition party, Fianna Fail, which entered the Dail in 1927. Fianna Fail won the 1932 election, and De Valera formed a government which lasted for 16 years.

As prime minister, he removed the last remaining restrictions on Irish sovereignty imposed by the treaty. His refusal to continue payment of land-purchase annuities to Britain led to an economic war between the two countries, which enabled him to pursue plans to make Ireland more self-sufficient economically. His government also extended social services, suppressed extremist threats to the state, and introduced a constitution in 1937 which made the Free State a republic in all but name. In 1938 agreements made with Britain ended the economic war and British occupation of Irish naval bases retained under the treaty. De Valera was unable, however, to end the partition of Ireland.

De Valera had been a strong supporter of collective security through the League of Nations, but he maintained a policy of neutrality, with overwhelming popular support, throughout World War II. In the postwar period Fianna Fail alternated in power with two interparty governments, the first of which formally established the Irish Republic in 1949. Returned to office with a decisive majority in 1957, De Valera retired from active politics in 1959, when he was elected president of the republic. He was reelected in 1966, the fiftieth anniversary of his entry into Irish political life. Failing eyesight troubled him from the 1930s onward and left him almost blind before his retirement from active politics in 1973. Concurrently, he held the post of Chancellor of the National University of Ireland from 1921 until 1975. He died on August 30, 1975.

The wisdom of De Valera's policies has been widely disputed but not his unequaled impact on Irish life in the twentieth century. The charismatic appeal of "Dev" was firmly based on his understanding of the outlook and way of life of a large section of the Irish people and on his fellow citizens' great respect for his ability, austere dignity, and idealism.