Tsang began his civil service career in 1967, occupying various positions in finance and trade in the Hong Kong Civil Service, and was appointed Financial Secretary of Hong Kong in 1995, becoming the first ethnic Chinese to hold the position under British administration. He remained in that position after the transfer of the sovereignty of Hong Kong before being appointed Chief Secretary for Administration after the resignation of Anson Chan. Tsang has won praise for his handling of the Hong Kong economy both as Chief Executive in the mid-2000s and as Financial Secretary in the late 1990s.

He assumed the office of Chief Executive of Hong Kong in 2005. Since his accession, he has been criticised for the government's mishandling of a number of incidents, most notably the demolition of Queen's Pier, Political Appointments System, the Leung Chin-man appointment controversy, and the Employee Retraining Levy waiver controversy. Tsang's popularity rating was 51.6% in January 2009, with 16.2% of those surveyed being satisfied with the government's performance, while 34.4 percent believed it was below par.