When the Allies' peace terms became known, Constantin Fehrenbach denounced them and claimed "the will to break the chains of slavery would be implanted" into a generation of Germans. Stresemann said of this speech: "He was inspired in that hour by God to say what was felt by the German people. His words, spoken under Fichte's portrait, the final words of which merged into “"Deutschland, Deutschland über alles"”, made it an unforgettably solemn hour. There was in that sense a kind of uplifting grandeur. The impression left on all was tremendous".
Stresemann briefly joined the German Democratic Party after the war, but was expelled for his association with the right wing. He then gathered most of the right wing of the old National Liberal Party into the German People's Party (, DVP), with himself as chairman. Most of its support came from middle class and upper class Protestants. The DVP platform promoted Christian family values, non-religious education, lower tariffs, opposition to welfare spending and agrarian subsides and hostility to "Marxism" (that is, the Communists, and also the Social Democrats).
The DVP was at first seen, along with the German National People's Party, as part of the "national opposition" to the Weimar Republic, particularly for its grudging acceptance of democracy and its attitude towards the Freikorps and the Kapp Putsch in 1920. Although they did not support the Freikorps, the party did not publicly condemn them either. By late 1920, Stresemann gradually moved to cooperation with the parties of the left and centre – possibly in reaction to political murders like that of Walther Rathenau. However, he remained a monarchist at heart.
On 13 August 1923, in the midst of the Ruhr Crisis, he was appointed Chancellor and Foreign Minister of a grand coalition government. As Chancellor, Stresemann went a long way towards resolving the crisis. In the so-called year of crises (1923) he showed strength by calling-off the popular peaceful resistance at the Ruhr. Since Germany was no longer able to pay the striking workers, more and more money was printed, which finally led to hyperinflation. Hans Luther, who was the current finance minister, ended this disastrous process by introducing a new currency, the Rentenmark, which reassured the people that the democratic system was willing and able to solve urgent problems.
Stresemann's decision to end passive resistance was motivated by his view that making a good faith effort to fulfill the terms of Versailles was the only way to win relief from the treaty's harsher provisions. He, like virtually every German, felt Versailles was an onerous "Diktat" that sullied the nation's honour. However, he felt that trying to fulfill the treaty's terms was the only way Germany could demonstrate that the reparations bill was truly beyond its capacity. He also wished to recover the Rhineland - he wrote to the Crown Prince on 23 July 1923: "The most important objective of German politics is the liberation of German territory from foreign occupation. First, we must remove the strangler from our throat".
However, some of his moves - like his refusal to deal firmly with culprits of the Beer Hall Putsch - alienated the Social Democrats. They left the coalition and caused its collapse on 23 November 1923. Stresemann remained as Foreign Minister in the government of his successor, Centrist Wilhelm Marx. He remained foreign minister for the rest of his life in eight successive governments ranging from the centre-right to the centre-left.
As Foreign Minister, Stresemann had numerous achievements. His first notable achievement was the Dawes Plan of 1924, which reduced Germany's overall reparations commitment and reorganized the Reichsbank.
After Sir Austen Chamberlain became British Foreign Secretary, he wanted a British guarantee to France and Belgium as the Anglo-American guarantee had fallen due to the United States' refusal to ratify the Treaty of Versailles. Stresemann later wrote: "Chamberlain had never been our friend. His first act was to attempt to restore the old Entente through a three-power alliance of England, France and Belgium, directed against Germany. German diplomacy faced a catastrophic situation". Stresemann conceived the idea that Germany would guarantee her western borders and pledged never to invade Belgium and France again, along with a guarantee from Britain that they would come to Germany's aid if attacked by France. Germany was in no position at the time to attack, as Stresemann wrote to the Crown Prince: "The renunciation of a military conflict with France has only a theoretical significance, in so far as there is no possibility of a war with France". Stresemann negotiated the Locarno Treaties with Britain, France, Italy, and Belgium. On the third day of negotiations Stresemann explained Germany's demands to the French Foreign Secretary, Aristide Briand. As Stresemann recorded, Briand "almost fell off his sofa, when he heard my explanations". Stresemann said that Germany alone should not make sacrifices for peace; European countries should cede colonies to Germany; the disarmament control commission should leave Germany; the Anglo-French occupation of the Rhineland should be ended; and Britain and France should disarm as Germany had done. The Treaties were signed in October 1925 at Locarno. Germany officially recognized the post-World War I western border for the first time, and was guaranteed peace with France, and promised admission to the League of Nations and evacuation of the last Allied occupation troops from the Rhineland. Germany's eastern borders were guaranteed to Poland only by France, not by a general agreement.
Stresemann was not willing to conclude a similar treaty with Poland: "There will be no Locarno of the east" he said. Moreover he never excluded the use of force to regain the eastern territories of Germany which had come under Polish control as a consequence of the Treaty of Versailles. The reason were atrocities against the German minority in the former German territories committed by or tolerated by the Polish government, see: and Hermann Rauschning. In the session of the League of Nations on 15 December 1928 in Lugano Stresemann formulated a furious charge against Poland because of these crimes which were well known to the League of Nations. The chairman Aristide Briand, French foreign minister, concluded the session after this speech with the words: "The League of Nations must never break the sacred support of the minority-rights."
After this reconciliation with the Versailles powers, Stresemann moved to allay the growing suspicion of the Soviet Union. He said to Nikolay Krestinsky in June 1925, as recorded in his diary: "I had said I would not come to conclude a treaty with Russia so long as our political situation in the other direction was not cleared up, as I wanted to answer the question whether we had a treaty with Russia in the negative". The Treaty of Berlin signed in April 1926 reaffirmed and strengthened the Rapallo Treaty of 1922. In September 1926, Germany was admitted to the League of Nations as permanent member of the Security Council. This was a sign that Germany was quickly becoming a "normal" state and assured the Soviet Union of Germany's sincerity in the Treaty of Berlin. Stresemann wrote to the Crown Prince: "All the questions which to-day preoccupy the German people can be transformed into as many vexations for the Entente by a skilful orator before the League of Nations". As Germany now had a veto on League resolutions, she could gain concessions from other countries on modifications on the Polish border or Anschluss with Austria, as other countries needed her vote. Germany could now act as "the spokesman of the whole German cultural community" and thereby provoke the German minorities in Czechoslovakia and Poland.
Stresemann was co-winner of the Nobel Peace Prize in 1926 for these achievements.