In December 1999 Kejriwal and Manish Sisodia founded Parivartan, a citizens' movement in Delhi that helped residents use the right to information against corruption in rations, public works and utilities. For this work he received the Ramon Magsaysay Award for Emergent Leadership in 2006, and that year he set up the Public Cause Research Foundation. In 2011 he was a key organiser, with Anna Hazare, of the India Against Corruption movement that demanded a Jan Lokpal law.
The Enforcement Directorate arrested Kejriwal on 21 March 2024 in a money-laundering case linked to Delhi's withdrawn liquor excise policy. It was the first arrest of a sitting chief minister in India. AAP and opposition parties called the case politically motivated, while the agencies said they had evidence of wrongdoing. He was given interim bail to campaign in the 2024 Lok Sabha election, returned to Tihar Jail on 2 June, and was later also arrested by the CBI. The Supreme Court granted him bail on 13 September 2024. On 17 September he resigned as Chief Minister, saying he would return only with a fresh public mandate, and Atishi succeeded him.
On 27 February 2026 the Rouse Avenue court in Delhi discharged Kejriwal, Manish Sisodia and 21 others in the CBI case, saying there was not enough material to proceed to trial. The CBI said it would appeal, and the ED's money-laundering case remains pending. In January 2026 a Delhi court had also acquitted him in two cases over skipping ED summonses.
In the February 2025 Delhi election the BJP won 48 seats and AAP 22, ending AAP's decade in power. Kejriwal lost New Delhi to the BJP's Parvesh Verma by about 4,000 votes. He then focused on party work in Punjab, Gujarat and Goa, and in 2025 said he would not go to the Rajya Sabha.
In October 2026 he was detained by Delhi Police while joining opposition protests demanding the resignation of Chief Election Commissioner Gyanesh Kumar. On 12 October Delhi Police registered an FIR against him and other AAP leaders after the Delhi Sikh Gurdwara Management Committee complained about protesters entering Gurdwara Bangla Sahib. AAP leaders said the police had entered the gurdwara to detain protesters.