Wolsey's rise coincided with the accession in April 1509 of Henry VIII, whose character, policies and attitude to diplomacy differed significantly from those of his father. In 1509 Henry appointed Wolsey to the post of Almoner, a position that gave him a seat on the Privy Council and gave him an opportunity for greater prominence and for establishing a personal rapport with the King. A factor in Wolsey's rise was the young Henry VIII's relative lack of interest in the details of government during his early years.

Wolsey's rise to a position of great secular power paralleled his increased responsibilities in the Church. He became a Canon of Windsor in 1511. In 1514 he was made Bishop of Lincoln, and then Archbishop of York in the same year. Pope Leo X made him a cardinal in 1515, with the titular church of St Cecilia in Trastevere. Following the success of his campaign in France and the peace negotiations that followed, Wolsey's ecclesiastical career advanced further: in 1523 he became additionally Bishop of Durham, a post with wide political powers and for that reason known as Prince-Bishop of Durham.

The war against France in 1512–1514 was the most significant opportunity for Wolsey to demonstrate his talents in the foreign policy arena. A convenient justification for going to war came in 1511 in the form of a plea for help from Pope Julius II, who was beginning to feel threatened by France. England formed an alliance with the Pope, Ferdinand V of Spain, and Maximilian I, Holy Roman Emperor against Louis XII of France.

The first campaign against France was not a success, partly due to the unreliability of the alliance with Ferdinand. Henry learned from the mistakes of the campaign and in 1513, still with papal support, launched a joint attack on France with Maximilian, successfully capturing two French cities and causing the French to retreat. Wolsey's ability to keep a large number of troops supplied and equipped for the duration of the war was a major factor in its success. Wolsey also had a key role in negotiating the Anglo-French treaty of 1514, which secured a temporary peace between the two nations. Under this treaty, the French king, Louis XII, would marry Henry's young sister, Mary. In addition England was able to keep the captured city of Tournai and to secure an increase in the annual pension paid by France.

As a legal administrator Wolsey reinvented the equity court, where the verdict was decided by the judge on the principle of "fairness". As an alternative to the Common Law courts, Wolsey re-established the position of the prerogative courts of the Star Chamber and the Court of Chancery. The system in both courts concentrated on simple, inexpensive cases, and promised impartial justice. He also established the Court of Requests (although this court was only given this name later on) for the poor, where no fees were required. Wolsey's legal reforms were popular, and overflow courts were required to attend to all the cases. Many powerful individuals who had felt themselves invincible under the law found themselves convicted; for Example, in 1515, the Earl of Northumberland was sent to Fleet Prison and in 1516 Lord Abergavenny was accused of illegal retaining.

The death of King Ferdinand of Spain, the father-in-law of Henry VIII, and England's closest ally, in 1516 was a further blow. Ferdinand was succeeded by Charles V, who immediately proposed peace with France. On the death of Maximilian I, Holy Roman Emperor, in 1519, Charles was elected in his stead; thus Charles ruled a substantial portion of Europe and English influence became limited on the continent.

Wolsey also used his courts to tackle national controversies, such as the pressing issue of enclosures. The countryside had been thrown into discord by the entrepreneurial actions of landlords enclosing areas of land and converting from arable farming to pastoral farming, requiring fewer workers. The Tudors valued stability, and this mass urban migration represented a serious crisis. Wolsey conducted national enquires in 1517, 1518 and 1527 into the presence of enclosures. In the course of his administration he used the court of Chancery to prosecute two hundred and sixty-four landowners, including peers, bishops, knights, religious heads, and Oxford colleges. Enclosures were seen as directly linked to rural unemployment and depopulation, vagrancy, food shortages and, accordingly, inflation. This pattern was repeated with many of Wolsey's other initiatives, particularly his quest to abolish enclosure. Despite spending significant time and effort in investigating the state of the countryside and prosecuting numerous offenders, Wolsey freely surrendered his policy during the parliament of 1523 to ensure that Parliament passed his proposed taxes for Henry's war in France. Enclosures remained a Problem for many years.

Wolsey used the Star Chamber to enforce his 1518 policy of Just Price, which attempted to regulate the price of meat in London and other major cities. Those found to be charging excessive amounts were prosecuted by the Chamber. After the bad harvest of 1527, Wolsey took the initiative of buying up surplus grain and selling it off cheaply to the needy. This act of generosity greatly eased disorder and became Common practice after a disappointing harvest.

Henry's marriage to Catherine of Aragon had produced no sons who survived infancy; the Wars of the Roses were still within living memory, leading to the fear of a power struggle after Henry's death. Henry felt the people would only accept a male king, and not his daughter Mary. Henry believed God had cursed him for the sin of marrying the widow of his elder brother. He also believed that the papal dispensation for his marriage to Catherine was invalid because it was based upon the claim that Catherine was still a virgin after her first husband's death. Henry argued that Catherine's claim was not credible, and thus, the original papal dispensation must be withdrawn and their marriage annulled. Henry's motivation has been attributed to his determination to have a son and heir, and to his Desire for Anne Boleyn, one of his wife's maids-of-honour. Catherine had no further pregnancies after 1519; Henry began annulment proceedings in 1527.

The Treaty of London is often regarded as Wolsey's finest moment, but it was abandoned within a year. Wolsey developed links with Charles in 1520 at the Field of the Cloth of Gold. Later at the Calais Conference (1521) Wolsey signed the Secret Treaty of Bruges (1521) with Charles, stating that they would join Spain in a war against France if France refused to sign the peace treaty; ignoring the Anglo-French treaty of 1518. Wolsey's relationship with Rome was also ambivalent. Despite his links to the papacy, Wolsey was strictly Henry's servant. Though the Treaty of London was an elaboration on Pope Leo's ambitions for European peace, it was seen in Rome as a vain attempt by England to assert her influence over Europe and steal some papal thunder. Furthermore, Wolsey's peace initiatives prevented a crusade to the Holy Land, which was the catalyst for the Pope's Desire for European peace.

Wolsey made careful moves to destroy or neutralise the influence of other courtiers. He helped cause the fall of Edward Stafford, 3rd Duke of Buckingham, in 1521; and in 1527 he prosecuted Henry's close friend william Compton and Henry's ex-mistress Anne Stafford, Countess of Huntingdon, through the ecclesiastical courts for adultery. In the case of Charles Brandon, Duke of Suffolk, Wolsey adopted a different strategy, attempting to win Charles' favour by his actions after the Duke secretly married Henry's sister Mary Tudor, Queen of France, much to the King's displeasure. Wolsey advised the King not to execute the newlyweds, but to embrace them; whether this was through care for the couple or on account of the threat they represented for his own safety is unclear. The bride, as both sister to Henry and Dowager Queen of France, had high royal status that could potential mean a threat to Wolsey should she so choose.

Wolsey made significant changes to the taxation system, devising, with the treasurer of the Chamber, John Heron, the "Subsidy". This revolutionary form of tax was based upon accurate valuations of the taxpayer's wealth, where one shilling was taken per pound from the income. The old fixed tax of 15ths and 10ths had meant that those who earned very little money had to pay almost as much in tax as the wealthy. With the new income tax the poorer members of society paid much less. This more efficient form of taxation enabled Wolsey to raise enough money for the King's foreign expeditions, bringing in over £300,000. Wolsey was also able to raise considerable amounts of capital through other means, such as through "benevolences" and enforced loans from the nobility, which raised £200,000 in 1522.

As well as his State duties, Wolsey simultaneously attempted to exert his influence over the Church in England. As cardinal and, from 1524, lifetime papal legate, Wolsey was continually vying for control over others in the Church. His principal rival was william Warham, the Archbishop of Canterbury, who made it more difficult for Wolsey to follow through with his plans for reform. Despite making promises to reform the bishoprics of England and Ireland, and, in 1519, encouraging monasteries to embark on a programme of reform, he did nothing to bring about these changes.

The closeness between England and Rome can be seen in the formulation of the League of Cognac in 1526. Though England was not a part of it, the League was organized in part by Wolsey with papal support. Wolsey's plan was that the League of Cognac, composed of an alliance between France and some Italian states, would challenge Charles' League of Cambrai. This initiative was both a gesture of allegiance to Rome and an answer to growing concerns about Charles V's dominance over Europe.

The same can be said for Wolsey's legal reforms. By making justice accessible to all and encouraging more people to bring their cases to court, the system was ultimately abused. The courts became overloaded with incoherent, tenuous cases, which would have been far too expensive to have rambled on in the Common Law courts. Wolsey eventually ordered all minor cases out of the Star Chamber in 1528. The result of this venture was further resentment from the nobility and the gentry.

It was rumoured that Anne Boleyn and her faction convinced Henry that Wolsey was deliberately slowing proceedings; as a result, he was arrested in 1529, and the Pope decided that the official decision should be made in Rome, not England.

In 1529 Wolsey was stripped of his government office and property, including his magnificently expanded residence of Hampton Court, which Henry took to replace the Palace of Westminster as his own main London residence. However, Wolsey was permitted to remain Archbishop of York. He travelled to Yorkshire for the first time in his career, but at Cawood in North Yorkshire, he was accused of treason and ordered to London by Henry Percy, 6th Earl of Northumberland. In great distress, he set out for the capital with his personal chaplain, Edmund Bonner. He fell ill on the journey, and died at Leicester on 29 November 1530, around the age of 57. Just before his death he reputedly spoke these words:

Wolsey's position in power relied solely on maintaining good relations with Henry. He grew increasingly suspicious of the "minions" – young, influential members of the Privy chamber – particularly after infiltrating one of his own men into the group. He attempted many times to disperse them from court, giving them jobs that took them to the Continent and far from the King. After the Amicable Grant failed, the minions began to undermine him once again. Consequently, Wolsey devised a grand plan of administrative reforms, incorporating the notorious Eltham Ordinances of 1526. This reduced the members of the Privy Council from twelve to six, removing Henry's friends such as Sir william Compton and Nicholas Carew.

The highest political position Wolsey attained was Lord Chancellor, the King's chief adviser (formally, as his successor and disciple Thomas Cromwell was not). In that position, he enjoyed great freedom and was often depicted as an alter rex (other king). After failing to negotiate an annulment of Henry's marriage to Catherine of Aragon, Wolsey fell out of favour and was stripped of his government titles. He retreated to York to fulfill his ecclesiastical duties as Archbishop of York, a position he nominally held, but had neglected during his years in government. He was recalled to London to answer to charges of treason—a Common charge used by Henry against ministers who fell out of favour—but died on the way from natural causes.

Meanwhile, a turnover of rulers in Europe threatened to diminish England’s influence. Peace with France in 1514 had been a true achievement for Wolsey and the King. With Henry’s sister, Mary, married to the French King, Louis XII, an alliance was formed, but Louis was not in good health. Less than three months later, Louis died and was replaced by the young and ambitious Francis I.