At the beginning of the Revolutionary War, Phelps joined the Continental Army and fought in the Battle of Lexington. He left the service in 1777 and, relying on his experience as a merchant, became Massachusetts Superintendent of Purchases of Army Supplies, a Deputy Commissary of the Continental Army. He was introduced to Robert Morris, the great financier of Revolutionary times. He supplied troops and received commendation from General George Washington for his efforts. He was a member of the Massachusetts House of Representatives from 1778 to 1780 and a member of the Federal Constitutional Convention in 1779 and 1780. After the war ended, he became a prominent businessman and was elected to the Massachusetts Senate in 1785 and served on the Governor’s council in 1786. He was elected as a Democratic-Republican to the Eighth United States Congress, holding office from March 4, 1803, to March 3, 1805, and ran unsuccessfully for Lieutenant Governor of New York in 1804 on the ticket headed by Aaron Burr.