At the outbreak of the First English Civil War in 1642, Blood returned to England and initially took up arms with the Royalist forces loyal to Charles I. As the conflict progressed he switched sides and became a lieutenant in Oliver Cromwell's Roundheads. In 1653 at the cessation of hostilities Cromwell awarded Blood land grants as payment for his Service and appointed him a justice of the peace. Following the Restoration of King Charles II to the Crowns of the Three Kingdoms in 1660, Blood fled with his family to Ireland. The confiscations and restitutions under the Act of Settlement 1662 (which sought to cancel and annul some of the grants of land and real properties allocated as reward to new holders being Cromwellians under the Act of Settlement 1652) brought Blood to financial ruin, and in return Blood sought to unite his fellow Cromwellians in Ireland to cause insurrection.

While in the Dutch Republic, Blood gained the favour of Admiral de Ruyter, an opponent of the English forces in the Anglo-Dutch Wars, and was implicated in the Scottish Pentland Rising of 1666 by the Scottish Presbyterian Covenanters. At some point during this period, Blood became associated with the wealthy George Villiers, 2nd Duke of Buckingham, who 19th-century commentators believed used Blood as a means to punish his own political and social adversaries, since his own class ranking did not allow him to meet them "in the field".

Since Ormonde's return to England, he had taken up residence at Clarendon House. Blood had followed Ormonde's movements and noted that he frequently returned late in the evening accompanied by a small number of footmen. On the night of 6 December 1670, Blood and his accomplices attacked Ormonde while the latter travelled St James's Street. Ormonde was dragged from his coach, bound to one of Blood's henchmen, and taken on horseback along Piccadilly with the intention of hanging him at Tyburn. The gang pinned a paper to Ormonde's chest spelling out their reasons for his capture and murder. With one of his servants who had given chase on horseback, Ormonde succeeded in freeing himself and escaped. The plot's secrecy meant that Blood was not suspected of the crime, despite a reward being offered for the capture of the attempted assassins. In the King's presence, James's son, Thomas Butler, accused the Duke of Buckingham of being behind the crime. Thomas threatened to shoot Buckingham dead in revenge, if his father, James, was murdered.

On 9 May 1671, in furtherance of the deception, Blood convinced Edwards to show the jewels to him, his supposed nephew, and two of his friends while they waited for a dinner that Mrs Edwards was to put on for Blood and his companions. The jewel keeper's apartment was in Martin Tower above a basement where the jewels were kept behind a metal grille. Reports suggest that Blood's accomplices carried canes that concealed rapier blades, daggers, and pocket pistols. In entering the Jewel House, one of the men made a pretence of standing watch outside while the others joined Edwards and Blood. The door was closed and a cloak thrown over Edwards, who was struck with a mallet, knocked to the floor, bound, gagged and stabbed to subdue him.

Following his capture, Blood refused to answer to anyone but the King and was consequently taken to the palace in chains, where he was questioned by King Charles, Prince Rupert, and others. King Charles asked Blood, "What if I should give you your life?", and Blood replied, "I would endeavour to deserve it, Sire!" To the disgust of Ormonde, Blood was not only pardoned but also given land in Ireland worth £500 a year. In contrast, Edwards' family was awarded less than £300 by the King, a sum which was never paid in full, and he returned to his duties at the Tower regaling visitors with his tales of the attempted theft. He died in 1674 and his tomb rests in the chapel of St Peter's Ad Vincula, at the Tower of London.

In 1679 Blood fell into dispute with the Duke of Buckingham, his former patron, and Buckingham sued Blood for £10,000, for insulting remarks Blood had made about his character. In the proceedings that followed, Blood was convicted by the King's Bench in 1680 and granted bail, although he never paid the damages.

Blood was released from prison in July 1680 but had fallen into a coma by 22 August. He died on 24 August at his home in Bowling Alley, Westminster. His body was buried in the churchyard of St Margaret's Church (now Christchurch Gardens) near St. James's Park. It is believed that his body was exhumed by the authorities for confirmation: such was his reputation for trickery, it was suspected he might have faked his death and funeral to avoid paying his debt to Buckingham. Blood's epitaph read: