McNulty was an unsuccessful Labour candidate for Harrow East in the 1992 general election, but was elected as the constituency's MP in the May 1997 general election. He served as a Whip from 1999 to 2002, following a period as Parliamentary Private Secretary to David Blunkett. McNulty was then appointed Parliamentary Under Secretary to the Office of the Deputy Prime Minister with responsibility for neighbourhood renewal, housing and planning. He was moved to the Department for Transport in June 2003 as Parliamentary Under Secretary with responsibility for aviation, local transport, and London, and was promoted to Minister of State with responsibility for Rail and London in September 2004. McNulty moved to the Home Office on 9 May 2005 as Minister of State for Immigration, following the general election reshuffle. In May 2006 his Home Office portfolio changed to responsibility over the policing and crime, security and counter-terrorism. In July 2007, he became a Privy Councillor. In Gordon Brown's reshuffle on 3 October 2008, McNulty moved to become Minister of State for Employment and Welfare Reform at the Department for Work and Pensions and Minister for London, and was permitted to attend cabinet meetings until his resignation on 5 June 2009. During his period as Minister, McNulty was concerned with benefit fraud suggesting that "we are absolutely determined to stop benefit thieves stealing from the British taxpayer. Our commitment extends beyond the borders of the UK. Even in sunny Spain, we're closing in on benefit fraud".
MPs' expenses controversy
In 2009, McNulty was one of many MPs who were involved in a political scandal following the disclosure of expenses of Members of the United Kingdom Parliament. In March 2009, he admitted claiming expenses on a second home, occupied by his parents, which was 8 miles away from his primary residence, after details appeared in The Mail on Sunday. McNulty asserted that the claim was appropriate, but he ceased claiming the allowances. Subsequently, the Parliament standards committee said that advice from the Fees Office was "mistaken". He was asked to apologise to the House of Commons and repay £13,837, which he did. In an article headlined "Tony McNulty, Benefit Cheat", Alex Massie in a blog for The Spectator contrasted the statements made by McNulty regarding benefit cheats with his own claims for expenses. On 18 May 2007, McNulty was one of the 98 MPs who voted in favour of exempting parliamentarians from the application of the Freedom of Information Act 2000. On 5 June 2009, after the revelations in the expenses scandal, McNulty resigned from the government. At the 2010 general election, McNulty lost to Bob Blackman of the Conservative Party.