Lilo worked as a permanent secretary for the Ministries of Finance and of the Environment before entering politics. He was elected to the National Parliament of the Solomon Islands in 2001. In November 2011, Prime Minister Danny Philip fired Lilo, his Finance Minister, and Central Bank GovernorRick Hou, accusing both of undermining his government. Philip had been accused of misusing and misappropriating a $10 million national development fund, which had been allocated to Solomon Islands from the government of Taiwan. In response to his sacking, Lilo told reporters, "No one undermined the prime minister, but he undermined himself by abusing his powers and the highest office in the country. He sacked us to create a vacuum to lure MPs from the opposition." Lilo further criticized Philips, "What he did was unbelievable, unacceptable and sickening."
Prime Minister Danny Philip resigned on 11 November 2011, ahead of a vote of no confidence stemming from the allegations of the misuse of Taiwanese funds. On 16 November 2011, Lilo was elected Prime Minister of Solomon Islands, winning a majority of the 29 of the 49 eligible members of Parliament and defeating three other rivals for the office. Former Prime Minister Manasseh Sogavare of East Choiseul received nine votes, MP for North Vella La Vella Milner Tozaka received nine votes, and MP for Gao/Bugotu Samuel Manetoali earned just two votes in parliament. Lilo was declared the winner by Governor General Sir Frank Kabui. Lilo took the oath of office before Kabui at approximately 5 p.m. On 18 November two days after his election Lilo held his first official engagement with US ambassador to the Solomon Islands, Teddy Taylor regarding the Solomon Islands eligibility for US Millennium Challenge Account funding. Lilo is a member of the National Coalition for Reform and Advancement, the same party as his predecessor, Danny Philip. Lilo took over the leadership of the NCRA from Philips, which retains the Office of Prime Minister. Prime Minister Lilo completed his cabinet appointments by 23 November 2011, restoring almost all of ministers from the previous NCRA government to their posts. The only major change was Lilo's appointment of Rick Hou as the country's new finance minister. Lilo reappointed Manasseh Maelanga as deputy prime minister. Maelanga was also appointed Home Affairs Minister. Lilo is a key supporter of the Regional Assistance Mission to Solomon Islands. Prime Minister Lilo pledged to refocus on Solomon Islands' faltering coconut industry at the opening 48th Asian Pacific Coconut Committee Ministerial meeting, which was held at the Mendana Hotel in Honiara on 28 November 2011. Lilo's government introduced the motion which led to the United Nations General Assembly re-inscribing French Polynesia on the United Nations list of Non-Self-Governing Territories in May 2013. Lilo stated that he wished to see French Polynesia obtain self-determination regarding its future status. The day before the vote in the General Assembly, the Assembly of French Polynesia formally protested against the prospect of the country being re-added to the list. France denounced Solomon Islands-introduced motion as "blatant interference a complete absence of respect for the democratic choice of Polynesians", who had just elected a government hostile to the prospect of independence.
