His political career started with the Nassau County Republican Party, and he held the appointive position of Public Administrator of Nassau County, where he was responsible for managing the assets of county residents who died without wills. He was first appointed and then elected Receiver of Taxes of Hempstead, New York. He left this office to become a town supervisor in Hempstead and in 1977 he was elected presiding supervisor. He was also vice chairman of the Nassau County Board of Supervisors from 1977 to 1980.

Despite being a rather obscure candidate, he defeated incumbent Sen. Jacob Javits by 56% to 44% in the 1980 Republican primary election, after Javits' 1979 diagnosis of generally fatal amyotrophic lateral sclerosis. Javits nevertheless pursued the seat on the Liberal Party ticket, splitting the left-wing vote in ordinarily liberal New York with Democratic Congresswoman Elizabeth Holtzman and leading to D'Amato's 45% plurality victory.

He also holds the record for the second and eighth longest filibusters ever recorded in the United States Senate. He is remembered for his unique and rather comical filibusters. In 1986, in a filibuster against a military bill lasted 23 h 30 min, he was known for reading the District of Columbia phone book. In 1992, D'Amato filibustered a bill that would have caused the loss of 750 jobs in upstate New York by singing "South of the Border (Down Mexico Way)".

He was a member of the President's Commission on Aviation Security and Terrorism (PCAST), which was set up in September 1989 to review and report on aviation security policy in light of the sabotage of Pan Am FLIGHT 103 on December 21, 1988.

D'Amato was known for being fairly conservative, a reflection of then-strongly conservative Nassau County and Long Island. He strongly supported the conservative positions of his party on "law and order" issues such as capital punishment and harsh penalties for drug offenses. On some issues, he agreed with the opposition: in 1993, D'Amato was one of only three Republicans to vote in favor of allowing gays to serve openly in the U.S. military. In 1996, he was among the minority of Republicans to vote for the Employment Non-Discrimination Act.

D'Amato was very influential in New York Republican politics, and he was widely considered the "boss" of the state party during his Senate years. For Example, he played a leading role in recruiting George Pataki and in securing him the Republican nomination in the gubernatorial race of 1994.

While he was in office, he was chair of the Senate Committee on Banking, Housing and Urban Affairs, and was a member of the Senate Finance Committee. As a member of the former, he became a leading critic of the Clinton administration regarding the Whitewater scandal, and during 1995 and 1996, he chaired the hearings-heavy Senate Special Whitewater Committee. As a member of the latter, he championed the cause of Holocaust survivors trying to recover relatives' funds from accounts in Swiss banks.

D'Amato had a brief cameo as himself in the 1997 movie The Devil's Advocate. D'Amato also made a brief cameo appearance as himself in an episode of Spin City.

On labor issues too, he frequently sided with Democrats. His 54% to 44% 1998 loss was attributed to a lack of support among moderate voters in New York City, the site of opponent Schumer's US Congressional district. His loss was also partially attributed to reports arising from D'Amato's use of the term "putzhead" (a Yiddish vulgarity) to refer to Schumer.

Since he left office in 1999, no other Republican from New York has served in the U.S. Senate.

On June 12, 2007, the former three-term Senator from New York endorsed one-time Senate colleague from Tennessee Fred Thompson for the Republican nomination for President in 2008. In explaining his endorsement of Thompson, former Senator D'Amato called Thompson "a real conservative", not a candidate who adopted conservative positions in preparation for an election. D'Amato added, "Fred Thompson is the kind of candidate our party can unify behind and support wholeheartedly." On January 22, 2008 after poor showings from Fred Thompson, D'Amato threw his support to John McCain for the 2008 Presidential Election, saying "If you want to win in November, John McCain is the man."

He appeared on Howard Stern's Sirius-XM radio show on July 20, 2009, to promote the PPA.

On March 14, 2012, D'Amato endorsed Mitt Romney for President, saying “I am proud to endorse Governor Romney and support his candidacy for the Republican nomination for the Presidency. It is time for Republicans across the country to embrace Governor Romney and make him our nominee. Governor Romney is a successful businessman. He understands how our economy works and has a proven record of creating jobs. We need a man with his experience to take charge and lead our economy or we’ll have four more years of the most liberal, tax and spend administration we have ever seen. I urge my fellow Republicans to unite behind Governor Romney and make him our nominee.” He and Peter Kalikow appeared with Romney at fundraisers in New York leading up to the election.

On August 26, 2015, D'Amato endorsed Ohio Governor John Kasich, over colleagues Jeb Bush and George Pataki. While stating that the Republican party needs to move past the Bushes, he credited Pataki as a "wonderful guy", but cited Kasich's experience in balancing the budget as a congressman in the 1990s, and now in Ohio.

D'Amato married his first wife, Penelope, with whom he has four children, in 1960. Al and Penelope D'Amato separated in 1982 after 22 years of marriage. After a 13-year separation, their divorce became final in 1995. On July 18, 2004, he married Katuria Elizabeth Smith, 29 years his junior. They have one son, Alfonso Marcello D'Amato, born in 2008, and a daughter, Luciana Cioffari D'Amato, born in 2009. Katuria D'Amato filed for divorce on 3 October 2017. It was also reported that both of them had earlier in the year been "kicked off separate flights just nine days apart, allegedly for arguing with the crew".