Sheila Dixit was handpicked by Rajiv Gandhi to be part of his council of ministers after he became the prime minister in 1984. During the period between 1984 and 1989, she represented Kannauj parliamentary constituency of Uttar Pradesh. As a member of Parliament, she served on the Estimates Committee of Lok Sabha. Dikshit also chaired the Implementation Committee for Commemoration of Forty Years of India's Independence and Jawaharlal Nehru centenary. She represented India at United Nations Commission on Status of Women for five years. She also served as a Union Minister during 1986–1989, first as the minister of state for Parliamentary Affairs and later as a minister of state in the Prime Minister's Office. In Uttar Pradesh, she and her 82 colleagues were jailed in August 1990 for 23 days by the state government when she led a movement against the atrocities being committed against women. Earlier, in the early 1970s, she was chairperson of the Young Women's Association and was instrumental in the setting up of two of the most successful hostels for working women in Delhi. She was also the secretary of the Indira Gandhi Memorial Trust. In the 1998 parliamentary elections, Dikshit was defeated by Bharatiya Janata Party's Lal Bihari Tiwari in East Delhi constituency. Later in the year, Dikshit became Chief Minister of Delhi, a position she held until 2013. Dikshit represented the Gole Market assembly constituency in the 1998 and 2003 Assembly elections and New Delhi constituency from 2008. In 2009 and 2013, Dikshit was investigated for alleged misuse of government funds, but no charges were brought. Her party was wiped out in the 2013 Delhi Legislative Assembly election and Arvind Kejriwal, founder of the Aam Aadmi party, won the election in the New Delhi Assembly constituency by a margin of 25,864 votes. She resigned on 8 December 2013, but remained the caretaker chief minister of Delhi till the new government was sworn in on 28 December 2013. She was appointed as the governor of Kerala in March 2014, but was forced to resign five months later. She contested the 2019 Lok Sabha Elections as the candidate for Indian National Congress in the North East Delhi Constituency but came second after Bharatiya Janata Party's Manoj Tiwari.
Dikshit was admitted to Fortis Escorts Heart Institute on 19 July 2019 for cardiac arrhythmia and was put on a ventilator within a few moments of her admission. Her condition stabilised temporarily, however she did not recover from multiple cardiac arrests and her condition worsened during the following period. She later died at 3:55 pm on 20 July 2019, at the age of 81. The Delhi government announced a two-day mourning period on her death, and accorded her a state funeral.
