Horthy started his career as an officer in the Austro-Hungarian Navy, ultimately rising to the rank of Admiral. He served in the Otranto Raid and at the Battle of the Strait of Otranto (1917) and was the Commander-in-Chief of the Austro-Hungarian Naval Fleet in the last year of the First World War.

After Hungarian communists under Béla Kun seized power in Hungary in 1919, proclaiming the Hungarian Soviet Republicand commencing Hungary's Red Terror, a counterrevolutionary government was formed which asked Horthy to take command of its forces. In 1919, Romanian, Czechoslovakian and Yugoslavian forces invaded Hungary and later the Romanian army overthrew Kun's government. He allowed Hungary's White Terror to persist at first but eventually shut it down and imprisoned a few extremists among the anti-communists. When the Romanians evacuated Budapest in November 1919, Horthy entered at the head of the National Army.

The Hungarian Communist Party was banned, and in 1920 Horthy was declared Regent and Head of State, a position he held until his deposition in October 1944. Horthy refused to step down when the former King of Hungary, Charles IV, attempted to regain his throne on two occasions. Later in 1921, the Hungarian parliament formally nullified the Pragmatic Sanction, an act that effectively dethroned the Habsburgs.

A conservative who was distinctly inclined toward the right of the political spectrum, Horthy guided Hungary through the years between the two world wars and, in exchange for the restoration of some of the Hungarian territories lost by theTreaty of Trianon, he took Hungary into an alliance with Nazi Germany.

In April 1941, Hungary entered World War II as an ally of Germany. Horthy's faltering allegiance to his German patrons, however, eventually led the Nazis to invade and take control of the country in March 1944. In October 1944, Horthy announced that Hungary would surrender and withdraw from the Axis. He was forced to resign, placed under arrest and taken to Bavaria. At the end of the war, he came under the custody of American troops.