Carmel first joined the SDLP in 1972 and was an ordinary member for many years as well as being secretary and committee member of the Galway and Dublin SDLP support groups. She became chairperson of her local branch in 1996, in which year she was also an SDLP candidate in a Belfast City Council by election and Northern Ireland Forum elections. She was elected to Belfast City Council for the Balmoral area in 1997. Her committee duties include Planning, Health & Environment and Cultural Diversity. She was elected to Northern Ireland Assembly in June 1998. Hanna was Deputy Chair of the Environment Committee in the Northern Ireland Assembly until December 2001. She was appointed as Minister of Employment and Learning in December 2001. During that period she:
Reformed third level student funding which NUS/USI has acknowledged as being the fairest in the UK and which increased grants for the least well off
Put family-friendly legislation on the statute book, giving statutory paternity leave and extended maternity leave for both natural and adoptive parents, as well as the right to unpaid parental leave and flexible working time for parents with children under five and children up to eighteen with a disability.
Developed radical initiatives to enhance employability and tackle long-term unemployment
Gave lifelong learning increased status and resources to tackle adult literacy and numeracy issues.
Her ministerial career ended in October 2002 when the Northern Ireland Assembly was suspended as a result of the 'Stormontgate' affair. Carmel Hanna was founder and chair of the All-Party Group on International Development in the Assembly and, following her resignation from the Assembly in 2010, she worked with Voluntary Service Overseas in Namibia. Following the publication of the Murphy and Ryan Reports into institutional child abuse in state and church-run homes in the Irish Republic, Carmel Hanna tabled a motion in the Assembly on 2 December 2009 calling for a similar inquiry in Northern Ireland. The motion was passed unanimously and led to the setting up of the Hart Inquiry. Her stated major political aims are:
Preserving and enhancing South Belfast's townscape character
Improving health, education and social services
Retaining maternity services at the Jubilee hospital
First diagnosed with cancer in 2000, she resigned on 18 January 2010 as an MLA on grounds of ill-health. She received a Lifetime Achievement award in 2010 from the Royal College of Nursing Northern Ireland for her services to nursing; for many years she was the only serving registered nurse in the Assembly. Conall McDevitt was sworn in to replace her on 21 January 2010. Regarding her resignation, SDLP leader Mark Durkan said: "Carmel Hanna has served her constituents of South Belfast, the people of Northern Ireland and the wider SDLP with dignity, determination and dedication during a distinguished political career as a councillor, assembly member and as a minister." She is the mother of Claire Hanna, who was elected as an SDLP Belfast City councillor for Balmoral in 2011 and served as an SDLP MLA for Belfast South from 2015 to 2019, when Claire quit after her election as her party's MP also for the same constituency.