Dunne was a key participant in the Hollywood Blacklist episode of the 1940s and 1950s. In 1947 he co-founded the Committee for the First Amendment with John Huston and William Wyler in response to hearings held by the House Un-American Activities Committee (HUAC). Dunne, Huston, and Wyler, along with fellow members Humphrey Bogart, Lauren Bacall, Danny Kaye, and Gene Kelly, appeared before HUAC in Washington, D.C. in October 1947, protesting HUAC's activities and methods. Dunne was never subpoenaed or blacklisted himself, nor was he accused of any Communist Party affiliations.