In December 2009 Kelly was elected to represent the people of Higgins following the retirement of former Federal Treasurer the Hon Peter Costello AC.
Kelly was appointed as the Minister for Revenue and Financial Services in the Turnbull Government in July 2016. In December 2017 she was also appointed as the Minister for Women and Minister Assisting the Prime Minister for the Public Service. She is a member of Cabinet and also serves on Cabinet's Expenditure Review Committee (ERC).
She served as the Minister for Small Business and Assistant Treasurer from September 2015 to July 2016, and was the Parliamentary Secretary to the Treasurer from December 2014 until being appointed to Cabinet in 2015.
During her time as Minister for Small Business, Minister O'Dwyer and the Turnbull Government introduced unfair contract protections for small business, established the Small Business and Family Enterprise Ombudsman, abolished the Road Safety Remuneration Tribunal, and announced the amendment of section 46 of the competition law to level the playing field for small businesses. As a member of the Expenditure Review Committee, she also ensured small businesses benefited from the 2016-17 Budget's tax cuts and expanded small business tax concessions.
She was Chairman of the House of Representatives Standing Committee on Economics from 2013 to 2015.
Kelly has been Chairman of the Australia-United States Parliamentary Friendship Group and Convenor of the Australia-Americas Network, encompassing North, Central and South America.
Kelly is the founder and Chairman of the Parliamentary Friends of Women in Science, Maths and Engineering. In addition, Kelly serves as an Ovarian Cancer Ambassador, Patron of the Stonnington City Brass and Patron of the East Malvern Junior Girls Football Team.