In the wake of the South Sea Bubble financial crisis, Walpole became First Lord of the Treasury and Chancellor of the Exchequer.

He never held the title 'Prime Minister,' but was given the powers that came to be associated with the office. George I also gave him 10 Downing Street, still the official residence of the prime minister.

George IIexercised little control over British domestic policy, which was largely controlled by the Parliament of Great Britain. As elector, he spent twelve summers in Hanover, where he had more direct control over government policy.

During the War of the Austrian Succession, George participated at the Battle of Dettingen in 1743, and thus became the last British monarch to lead an army in battle. In 1745, supporters of the Catholic claimant to the British throne, James Francis Edward Stuart ("The Old Pretender"), led by James's son Charles Edward Stuart ("The Young Pretender" or "Bonnie Prince Charlie"), attempted and failed to depose George in the last of the Jacobite rebellions.