M. K. Narayanan joined the Indian Police Service in 1955 and passed out with the highest marks. After a brief stint as a Sub-Divisional Police Officer in the erstwhile State of Madras, he went on deputation to the Intelligence Bureau in February 1959. The rest of his service career was spent under the Government of India, mainly in the Intelligence Bureau, in which he dealt with a whole range of issues concerning internal and national security.

He headed the Intelligence Bureau (IB) from 1987 to 1990, before heading the Joint Intelligence Committee for a year. He became Chief (a four-star rank, equivalent to an Army general) of the IB again in 1991, before retiring in 1992. He was then appointed Special Adviser (a non-Civil Service appointment) for Internal Security to the Prime Minister of India beginning in May 2004. He was Indian National Security Adviser with the rank of Minister of State from 2005 to 2010. He played a significant role in the negotiation of the Indo-US Civil Nuclear Agreement. He took over as Governor of West Bengal from Gopalkrishna Gandhi, who had a few disagreements with the then CPI(M)-ruled state on critical issues like violence in Nandigram and Singur.