In 1991, he became municipal commissioner in Skinnskatteberg Municipality. 1994 he became a member of the Parliament of Sweden. 2004 to 2006, he was Deputy Minister of Finance in the Cabinet of Göran Persson, with responsibility for municipal and financial market issues. After the Social Democrat's defeat in the 2006 election, Österberg returned to being a member of parliament. From 2008 to 2011, he functioned as the group leader of the Social Democratic group in parliament.