Wali Khan (R) with his father Bacha Khan

In 1942, Khan while still in his teens, joined the Khudai Khidmatgar movement. Soon after, he formally stepped into politics by joining the Indian National Congress where he eventually served as a provincial joint secretary of the party. He was arrested and charged under the Frontier Crimes Regulations, in 1943, at the height of the crackdown against the Quit India Movement. He opposed the 1947 partition of the subcontinent and criticised the British decision to break up India.[6]

His decision to serve in a more prominent political role was said to have been influenced by his elder brother, Ghani Khan's, decision to withdraw from politics. With his father in jail, Khan took over leading his fathers supporters.

Despite his father's efforts against partition and a brief attempt to instead create a new nation called Pakhtunistan, on August 14, 1947, Pakistan came into being. The new nation was divided into two wings (West and East Pakistan), separated by a thousand miles (1500 km) of Indian territory.

Like his father after the creation of Pakistan, Khan agitated for Pashtun autonomy within a Pakistani Federal system, which placed him at odds with government authorities. Imprisoned without charge in 1948, he was freed from in 1953; he immediately started negotiations with the central government to allay apprehensions about the Khudai Khidmatgar.[7] He held talks with then NWFP Chief Minister Sardar Abdul Rashid and Prime Minister Muhammad Ali Bogra. He also held a series of meetings with then Governor General Ghulam Mohammed. These negotiations proved successful and led to the release of hundreds of imprisoned activists belonging to the Khudai Khidmatgar movement. Khan next joined the National Awami Party(NAP) in 1956, a new political party formed by his father along with other progressive and leftist leaders from both wings of Pakistan.[8]

The National Awami Party seemed to be on its way to victory in the 1959 elections,[9] when the civilian President Iskandar Mirza was ousted in a coup by the military, under Commander-in-Chief Ayub Khan. One of Ayub Khan's first decisions after he came to power was to outlaw political activity and imprison politicians. Wali Khan, along with many other politicians at the time, was imprisoned and disqualified from contesting elections or participating in politics as part of this purge.