Lyons came from a family that was broadly sympathetic to the labour movement, but without any formal political involvement. Though widely read, he did not actively participate in politics until after leaving Stanley. Lyons helped found a branch of the Workers' Political League during his time in Smithton, but was forced to resign his membership due to restrictions on the involvement of public servants in political activities. Those rules were later relaxed, and by 1908 he was spending most of his free time campaigning for the Labor Party; he had a reputation as a first-rate orator. Lyons was elected to the Tasmanian House of Assembly at the 1909 state election, standing in the six-member Division of Wilmot. This required him to resign from the Education Department and give up his teaching career, which reduced his annual salary from £125 to £100. He was comfortably re-elected in 1912, although he was attacked with a horsewhip during one of his campaign speeches. The son of one of his political opponents was convicted of assault, and the incident received widespread media attention.