He was a member of the Bihar Legislative Assembly from 1980 to 1989. He had to resign from the post of Chief Minister of Bihar after being accused in the Fodder Scam in 1996. Thereafter, his wife became the Chief Minister. He founded the Rashtriya Janata Dal (RJD) in 1997, breaking ranks from the parent Janata Dal. Elected to the 14th Lok Sabha from the Chhapra and Madhepura seats of Bihar, he became the railway minister in the present UPA coalition government.
His most notable achievement has been the financial turnaround of the Indian Railways. When Lalu took over the mantle of the Railway Minister, the Indian Railways was in bankruptcy and experts had predicted that its losses would only mount in the coming years. It is to the credit of Lalu Prasad that he was successful in leading the Indian Railways from being mired in losses to posting a surplus of nearly Rs 20,000 crores. This has become the subject of study at many management institutes in India and abroad, with Lalu being invited to give lectures. Lalu has been immensely popular with the masses, with many books written about him and songs being composed in his honour. Occasionally, Lalu-brand dolls, tobacco, chocolate, cosmetics have hit the markets.
He has had his share of infamy and has been sent to jail many times. His brother-in-law has been in the news too for all the wrong reasons. He has been very popular in Bollywood and the small screen with many actors mimicking him. He played a cameo role in the 2004 Hindi movie, Padamshree Laloo Prasad Yadav.