In 1971 O'Leary moved to New York City and did doctoral studies in organization development at Yeshiva University. As a lesbian during this period, she became involved with the nascent gay rights movement, joining the Gay Activists' Alliance Chapter in Brooklyn and later lobbying state politicians. In 1972, feeling that it was too dominated by the men of the movement, she left the GAA and founded Lesbian Feminist Liberation, one of the first lesbian activist groups in the women's movement. Two years later, she joined the National Gay Task Force, negotiating gender parity in its executive with director Bruce Voeller, joining as co-executive director. In 1977 O'Leary organized the first meeting of gay rights activists at the White House through arrangements made with White House staffer Midge Costanza. She was the first openly gay person appointed to a presidential commission, the National Commission on the Observance of International Women's Year, by Jimmy Carter. In this role she negotiated for gay and lesbian rights to be included on the discussion in a conference marking the year in Houston, Texas. O'Leary was among three openly gay delegates to the United States Democratic Party convention in 1976. She also served on the Democratic National Committee for 12 years, 8 of those on the executive committee. During the early 1980s, O'Leary focused on building National Gay Rights Advocates, then one of the largest national gay and lesbian rights groups. It was one of the first to respond to the HIV/AIDS epidemic's implications for legal and civil liberties, using aggressive litigation to ensure AIDS patients' access to treatment. She co-founded National Coming Out Day with Rob Eichberg in 1987.
In a speech given at the 1973 Christopher Street Liberation Day, O'Leary read a statement on behalf of 100 women that read, in part, "We support the right of every person to dress in the way that she or he wishes. But we are opposed to the exploitation of women by men for entertainment or profit." In response, Sylvia Rivera and Lee Brewster, both self-identified drag queens, jumped onstage and responded, "You go to bars because of what drag queens did for you, and these bitches tell us to quit being ourselves!" In the early 1970s, O'Leary and other gay liberation activists did not actively include all transsexuals and transvestites in proposed gay rights legislation, largely due to the belief that this would make basic legislation too difficult to pass at the time. O'Leary later regretted her stance against the drag queens attending in 1973: "Looking back, I find this so embarrassing because my views have changed so much since then. I would never pick on a transvestite now." "It was horrible. How could I work to exclude transvestites and at the same time criticize the feminists who were doing their best back in those days to exclude lesbians?" O'Leary was referring to the Lavender Menace, a description by second wave feministBetty Friedan for attempts by members of the National Organization for Women to distance themselves from the perception of NOW as a haven for lesbians. As part of this process, Rita Mae Brown and other lesbians who had been active in NOW were forced out. They staged a protest in 1970 at the Second Congress to Unite Women, and earned the support of many NOW members, finally gaining full acceptance in 1971.
Season 2, episodes 4 and 5 of the podcastMaking Gay History are about her. O'Leary, and her advocacy for the inclusion of lesbian and gay rights in the 1977 National Women's Conference, is portrayed by Canadian actress Anna Douglas in FX television miniseries Mrs America.
