Representing the Australian Labor Party, Emerson was elected to the Australian House of Representatives as the Member for Rankin at the 1998 federal election. Emerson was appointed Shadow Minister for Innovation, Industry, Trade and Tourism from 2001 to 2003, and then Shadow Minister for Workplace Relations and the Public Service from 2003 to 2004. Emerson was relegated to the backbench following the 1998 federal election, having supported Simon Crean and Mark Latham in leadership ballots against the wishes of his Right faction in Queensland. While on the backbench he wrote a book, Viral Signs, Vibrant Society, proposing new economic and social policies for the Federal Parliamentary Labor Party. Following the election of Kevin Rudd as Leader of the Labor Party and Julia Gillard as Deputy Leader in December 2006, Emerson was appointed Shadow Minister for the Service Economy, Small Business and Independent Contractors. On 3 December 2007, Emerson was named Minister for Small Business, Independent Contractors and the Service Economy and Minister Assisting the Finance Minister on Deregulation in the newly elected Rudd ministry. In June 2009, he was also appointed Minister for Competition Policy and Consumer Affairs. On 14 September 2010, Emerson was appointed the Minister for Trade, expanded to Minister for Trade and Competitiveness in a ministerial reshuffle announced on 2 March 2012. In October 2011, Emerson released a paper with Gillard's approval which advocated for continued rapid rates of population growth. On 29 October 2012, Emerson was assigned the role of Minister Assisting the Prime Minister on Asian Century Policy. In March 2013, in a further reshuffle of ministerial responsibilities, Emerson gained an additional portfolio as Minister for Tertiary Education, Skills, Science and Research. However, after a leadership change in the federal Australian Labor Party in June 2013 in which Kevin Rudd took over as prime minister from Gillard, Emerson resigned his ministerial portfolios and said he would not contest his seat at the next election. Following the Australian federal election held a few months later in September 2013, Jim Chalmers took over from Emerson as the MP for the seat of Rankin in Queensland.
Post-parliament
After leaving parliament, Emerson established an economic consulting firm, Craig Emerson Economics Pty Ltd. His clients have included Wesfarmers, Coles, AGL Energy, Santos, the BCA, the ACTU and the PNG Government. Emerson is an adviser to KPMG. He was also a regular presenter on Sky News Australia for some years after leaving parliament. In 2014, Emerson was appointed as an Adjunct Professor of Victoria University. He is a member of the CEDA Council on Economic Policy and is Chair of the Advisory Board, Centre for Transformative Innovation, Swinburne University of Technology. Emerson is also President of the Australia China Business Council NSW. In February 2018, Emerson's memoir, The Boy from Baradine, was published by Scribe Publications. In August 2018 Emerson was involved in public disagreement with Sky News Australia when he resigned as a commentator for the TV network. Emerson resigned in protest when Sky News broadcast an interview with the right-wing Australian activist Blair Cottrell. Emerson said that, "My father fought Nazis in World War II and was interred in a German POW camp." Explaining his decision on Twitter, he said that the decision by Sky News to screen the interview with Cottrell was "another step in a journey to normalising racism and bigotry in our country."