Larsen became leader of the Communist Party in 1932, and was elected to Folketinget (the lower chamber of Danish parliament Rigsdagen) in 1932. Together with other Danish communists, Larsen had to go into hiding in 1941 when the Danish police began arresting all party members. After the liberation of World War II, Larsen became a minister in the liberation cabinet and subsequently led his party to its best-ever result in the 1945 election, in which it took an eighth of all the votes. The election, however, resulted in a Liberal government, and Larsen's party was mostly shunned by the other party leaders.