Chan is a founding member of the Democratic Party. He was elected as chairman of the New Territories East Branch in 1999, and later became the party's minister of organization affairs and central committee member. He ran for the chairmanship election in 2004 but lost to Lee Wing-tat. He was then elected vice-chairman of the party. He also served as a part-time member of Central Policy Unit of the Hong Kong Government between 2004 and 2006.
He ran again for the chairmanship in December 2006, but lost to Albert Ho. He did not seek to run for the vice-chairmanship in the 2006 election. In 2010, the Democratic Party decided to support the government's proposal of the political reform package to expand the numbers of legislative council members from 30 to 35 in Geographical Constituency and 30 to 35 of Functional Constituency by adopting the idea of the "Super-district Councillors" which will be voted across the territory after nominations by District Councillors. Younger members of the Democratic Party including Chan believed that such proposal could not provide any significant progress towards democratic development in local political agenda.
In December 2010, Chan quit the party due to the electoral reform to found the Neo Democrats and is the incumbent convenor of the party. The Neo Democrats campaigned in the 2011 District Council election and won a total of 8 seats.