Stott Despoja joined the Australian Democrats, Australia's third political party, and after graduating from university worked as an advisor to several Democrats senators, including party leaders John Coulter and Cheryl Kernot. In November 1995 Coulter retired and Stott Despoja was chosen to replace him as a senator for South Australia. At 26 she was the youngest woman ever to become a member of the federal parliament. She was elected to the position in the 1996 general election. During her parliamentary career Stott Despoja has been the Democrats' spokesperson on a wide variety of areas including youth affairs, higher education and training, employment, trade, the status of women, foreign affairs and science and technology.

In 1997 then leader of the Democrats, Cheryl Kernot, resigned from the post and from the party to join the Australian Labor Party. Meg Lees became the leader of the Democrats and Stott Despoja the deputy leader. In April 2001 she was elected leader; the youngest leader of an Australian political party. She resigned this position in August 2002. Stott Despoja's term as a senator expires in June 2008.

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