In 2005, DiGaetano did not run for re-election in the split 36th District, choosing instead to run for the Republican nomination for governor. DiGaetano came in a distant sixth in the primary election with 16,684 votes, well behind winner Doug Forrester who received 108,941. On Election Day, November 8, 2005, Democrat Frederick Scalera, who joined the Assembly in 2003, retained his seat and running mate Gary Schaer was victorious, picking up DiGaetano's open seat for the Democrats.
Paul DiGaetano was a member of the Passaic City Council from 1981 – 1996, serving as its President from 1991 – 1993. He was the Assembly's Republican Leader from 2002 – 2003 and the Majority Leader from 1996 – 2001.
During his legislative career, DiGaetano pushed many measures that served the public’s interest, such as the HMO right-to-sue legislation, mandatory health insurance coverage for women’s cervical cancer tests, lightening the tax burden on New Jersey’s working poor and cutting taxes more than fifty times. DiGaetano worked on legislation to create Urban Enterprise Zones, protect children from sexual predators, toughen rape penalties, reform binding arbitration, create New Jersey’s first ever cord blood resource center, secure funding to purchase enhanced testing equipment for newborn infants. As Assemblyman, he sponsored the Senior Gold Prescription Discount Program, authored the Anti-Terrorism Act of 2001, sponsored the creation of a conservation trust fund to protect the New Jersey Meadowlands and Watershed, and authored the Brownfields Redevelopment Act.