From 1930 to 1934, he was a secretary of a governmental committee on unemployment. He also wrote his economics thesis Konjunkturspridningen (The Spread of the Business Cycle) and received his Doctorate from Stockholm University in 1933. In 1936, Hammarskjöld became a secretary in the Bank of Sweden and soon he was an undersecretary of finance. From 1941 to 1948, he served as a chairman of the Bank of Sweden.
Early in 1945, he was appointed as adviser to the cabinet on financial and economic problems, and coordinated government plans to alleviate the economic problems of the post-war period.
In 1947, Hammarskjöld was appointed to Sweden’s Ministry for Foreign Affairs, and in 1949 he became the State Secretary for Foreign Affairs. He was a delegate in the Paris conference that established the Marshall Plan. In 1948, he was again in Paris to attend conference for the Organisation for European Economic Co-operation. In 1950, he became a head of Sweden delegation to UNISCAN. In 1951, he became a cabinet minister without portfolio and in effect Deputy Foreign Minister. Although Hammarskjöld served with a cabinet dominated by the Social Democrats, he never officially joined any political party. In 1951, Hammarskjöld became vice chairman of the Swedish delegation to the United Nations General Assembly in Paris. He became the chairman of the Swedish delegation to the General Assembly in New York in 1952. On 20 December 1954, he was elected to take his father's vacated seat in the Swedish Academy.
When Trygve Lie resigned from his post as UN Secretary General in 1953, the Security Council decided to recommend Hammarskjöld to the post. It came as a surprise to him. He was selected on 31 March with the majority of 10 out of eleven states. The UN General Assembly elected him in the 7–10 April session, by 57 votes out of 60. In 1957, he was re-elected.
Hammarskjöld began his term by establishing his own secretariat of 4,000 administrators. He set up regulations that defined their responsibilities. He insisted that the secretary-general be able to take emergency action without the prior approval of either the Security Council or General Assembly.
During his term, Hammarskjöld tried to smoothe relations between Israel and the Arab states. In 1955, he went to mainland China to negotiate the release of 15 US pilots who had served in the Korean War and been captured by the Chinese. In 1956, he established the United Nations Emergency Force (UNEF). In 1957, he intervened in the Suez Crisis.
In 1960, the former Belgian colony and now newly-independent Congo asked for UN aid in defusing the escalating civil strife. (See Congo Crisis). Hammarskjöld made four trips to the Congo. His efforts towards the decolonisation of Africa were considered insufficient by the USSR; in September 1960, they denounced his decision to send a UN emergency force to keep the peace. They demanded his resignation, and the replacement of the office of secretary-general by a three-man directorate with a built-in veto, the “troika”. The objective was, citing the memoirs of the Soviet leader, Nikita Khrushchev, to “equally represent interests of three groups of countries: capitalist, socialist and recently independent.” Hammarskjöld denied Patrice Lumumba's request to help force Katanga to rejoin the Congo, causing Lumumba to turn to the Soviets for help.
In September 1961, Hammarskjöld found out about the fighting between non-combatant UN forces and Katangese troops of Moise Tshombe. He was en route to negotiate a cease-fire on the night of 17-18 September when his DC-6B airliner ("SE-BDY") crashed near Ndola, Northern Rhodesia (now Zambia). The crew had filed no flight plan, for security reasons, and a decoy aircraft ("OO-RIC") went via a different route ahead of Hammarskjöld's aircraft. He and fifteen others perished.
The explanation of investigators at the time was that Hammarskjöld's airplane descended too low on its approach to Ndola's airport in clear weather at night. No evidence of a bomb, surface-to-air missile, or hijacking has ever been presented, even though, following the crash, 180 men searched a six square kilometre area of the last sector of the aircraft's flight-path, looking for such evidence. Neither was any evidence of foul play found in the wreckage of the aircraft. The sole survivor, one of the three bodyguards on board, recalled nothing that would indicate anything other than a controlled flight into terrain crash in the interviews that he gave before he died of his injuries.
On 29 July 2005, 100 years after Hammarskjöld's birth, the Norwegian Major General, Bjørn Egge, gave an interview to the newspaper Aftenposten on the events surrounding Hammarskjöld's death. According to general Egge, who had been the first UN officer to see the body, Hammarskjöld had a hole in his forehead, and this hole was subsequently airbrushed from photos taken of the body. It appeared to Egge that Hammarskjöld had been thrown from the plane, and grass and leaves in his hands might indicate that he survived the crash - and that he had tried to scramble away from the wreckage. Egge does not claim directly that the wound was a gunshot wound, and his statement does not conform with Archbishop Tutu's information, or with the findings of the official inquiry. In an interview on 24 March 2007, on the Norwegian TV channel NRK, an anonymous retired mercenary claimed that he had shared a room with an unnamed South African mercenary who claimed to have shot Hammarskjöld. The alleged killer was claimed to have died in the late 1990s.
Hammarskjöld received the Nobel Peace Prize in 1961, having been nominated before his death.
After Hammarskjöld’s death, President John F. Kennedy regretted that he opposed the UN policy in the Congo and said: “I realise now that in comparison to him, I am a small man. He was the greatest statesman of our century.”
There is also a Dag Hammarskjöld Library at his alma mater, Uppsala University.
A Mahattan park near the United Nations headquarters is called the Dag Hammarskjold Plaza, as are several of the surrounding office buildings. He is also commemorated as a peacemaker in the Calendar of Saints of the Evangelical Lutheran Church in America on 18 September of each year.
A number of schools have been named after Hammarskjöld, including the Hammarskjold Middle School in East Brunswick Township, New Jersey, the Dag Hammarskjold Middle School in Wallingford, Connecticut, the Dag Hammarskjold Elementary School in Parma, Ohio, and the Hammarskjold High School in Thunder Bay, Ontario.
In 1962, the Dag Hammarskjöld Foundation was created as Sweden's national memorial to Dag Hammarskjöld.
The Carleton University in Ottawa awarded its first-ever honorary degree to Hammarskjold in 1954 when it presented him with a Legum Doctor, honoris causa. The University has continued this tradition by convocating an honorary doctorate upon every subsequent Secretary General of the United Nations.
On 22 July 1997, the U.N. Security Council in resolution 1121(1997) established the Dag Hammarskjöld Medal in recognition and commemoration of those who have lost their lives as a result of service in peacekeeping operations under the operational control and authority of the United Nations.
His only book, Vägmärken (Markings), was published in 1963. A collection of his diary reflections, the book starts in 1925, when he was 20 years old, and ends at his death in 1961. In the book, Hammarskjöld reveals himself as a Christian Mystic and describes his diplomatic deeds as an “inner journey”; the book became popular with U.S. students and also with the former Swedish archbishop, K. G. Hammar.