In 1997, when Blair led Labour to power for the first time since 1979, he became the youngest prime minister since William Pitt the younger (1783). He moved quickly to implement a third way program, reducing Labour's traditional reliance on state action to address social problems; to establish elected representative bodies in Scotland and Wales; to negotiate peace in Northern Ireland; and to cooperate politically with the third-party Liberal Democrats. Internationally, Blair worked improve ties with other European Union nations while moving slowly, due in part to public and political resistance, on monetary union and adoption of the euro; in his first term, he also was an outspoken proponent of the use of NATO forces in the Kosovo crisis. Blair's critics, however, charged that he was more style than substance. Despite a lack of enthusiasm for Blair's leadership style, which many regarded as arrogant, voters again gave him and Labour a resounding victory at the polls in 2001, making him the first Labour prime minister to win to consecutive terms in office.

Following the Sept., 2001, attacks by terrorists in the United States, Blair gave America highly visible support, including the use of British military forces, in its retaliation against Afghanistan and Osama bin Laden. He also strongly supported the Bush administration in its insistence that Iraq readmit UN weapons inspectors and disarm or face military action and, despite opposition from the British public and in the Labour party to war with Iraq, he committed British troops to the U.S.-led invasion of Iraq in 2003. After the invasion, when biological and chemical weapons were not readily found in Iraq, he and his government were criticized for having exaggerated the threat that Iraq represented.

Iraq hurt Blair and Labour politically and led to a diminished margin of victory in the 2005 parliamentary elections, but Blair nonetheless secured a record third consecutive term for a Labour government. Under pressure from many in his party, Blair announced (2006) that he would resign as party leader and prime minister, and he did so in June, 2007. His terms as prime minister were marked by sustained economic growth, in part due to the policies of Gordon Brown, and by steady, if sometimes fitful, progress toward peace in Northern Ireland, but in other areas, such as education and health, improvements were minor at best, and the reform of the House of Lords was largely incomplete. Brown succeeded Blair as party leader and prime minister, and Blair subsequently resigned from Parliament. After Blair stepped down he was named special envoy by the quartet (the European Union, Russia, the United States, and the United Nations) seeking to negotiate a peace accord between Israel and the Palestinians, the focus of his post being the strengthening of Palestinian institutions. A convert (2007) to Roman Catholicism, he established (2008) a foundation to promote interfaith understanding.