When the United States annexed Hawaii and established the Territory of Hawaii, Iaukea became involved in local politics as a member of the Democratic Party of Hawaii. In the general election of 1904, he unsuccessfully challenged Prince Jonah Kūhiō Kalanianaʻole, a Republican, for the position of congressional delegate from Hawaii on the Democratic ticket. In the 1906 election, he was elected as the second sheriff of the County of Honolulu, succeeding Arthur M. Brown. He served in this position from 1907 to 1909. He was a trustee of the Queen's Medical Center from 1905 to 1909.