At the Restoration of the Monarchy, he was created on 20 April 1661 Viscount Malden and Earl of Essex , the latter earldom having become extinct on the death of Robert Devereux, 3rd Earl of Essex. It was granted with special remainder to the male issue of his father. Capel was also appointed Lord Lieutenant of Hertfordshire and a few years later Lord Lieutenant of Wiltshire.

Early on he showed himself antagonistic to the court, to Roman Catholicism, and to the extension of the royal prerogative. Denzil Holles and Capell were deemed by King Charles II "stiff and sullen men," who would not yield against their convictions to his solicitations. In 1669 he was sent as ambassador to King Christian V of Denmark, in which capacity he gained credit by refusing to strike his flag to the governor of Kronborg.

In 1672 he was made a Privy Councillor and Lord Lieutenant of Ireland. It is clear that he was aligned to Charles's policy in 1672 and supported the Declaration of Indulgence especially in so far as it affected dissenters (and potentially extending this to Catholics, but this was always an ambiguous point). Essex had already developed a well known tolerance towards and association with dissenters of all types, but subsequent events showed that this latitude did not apply to Catholics. He remained in office until 1677, and his administration was greatly commended by Burnet and James Butler, 1st Duke of Ormonde, the former describing it "as a pattern to all that come after him". Burnet's viewpoint was not however unbiased, and whilst the administration of Essex's brother as Lord Deputy in 1696 followed such a high-minded approach, his predecessors, such as Clarendon, Tyrconnel and Ormond's own last period as viceroy could not be said to have followed Essex's model. He paid close attention to Irish interests, and took immense pains to understand the constitution and the political necessities of the country, appointing men of real merit to office, and maintaining an exceptional independence from solicitation and influence.

The purity and patriotism of his administration were in strong contrast to the systemic corruption prevalent at the court, and in its administrative arms and naturally aroused bitter opposition, as an obstacle to the unscrupulous employment of Irish revenues for the satisfaction of the court and the king's expenses. He proved to be a conscientious viceroy and, unlike so many other politicians of his age, he quickly showed an acumen for understanding accounts which was to lead to all kinds of challenges with the undertaking of Lord Ranelagh and his partners and with the same lord when he became vice-treasurer of Ireland in 1675. His conflict with Lord Ranelagh, to whom had been assigned the Irish revenues on condition of his supplying the requirements of the crown up to 1675, and whose accounts Essex refused to pass, was in many ways the principled struggle which was ultimately to lead to his recall – it was also an early sign as to how out of step Essex's integrity levels were with his contemporaries. He also opposed strongly the lavish gifts of forfeited estates to court favourites and mistresses, prevented the grant of Phoenix Park to the duchess of Cleveland, and refused to encumber the administration by granting reversions. Finally the intrigues of his enemies at home, and Charles's continual demands for money, which Ranelagh undertook to satisfy, brought about his recall in April 1677.

He immediately joined the country party and the opposition to Lord Danby's government, and on the latter's fall in 1679 was appointed a commissioner of the treasury, and the same year a member of Sir William Temple's new-modelled council. Essex is often looked upon as a surprise appointment to his key treasury role, but, based on his experience in Ireland and his ability to go 'toe to toe' with Danby on financial matters, it was in fact a sensible choice for Charles, and gave him the best option for balancing his financial options as the events leading to the Popish plot and Exclusion began to unfold. Essex followed the lead of Lord Halifax, who advocated not the exclusion of James, but the limitation of his sovereign powers, and looked to the Prince of Orange rather than to the Duke of Monmouth as the leader of Protestantism, incurring thereby the hostility of Lord Shaftesbury, but at the same time gaining the confidence of Charles.

He was appointed by Charles together with Halifax to hear the charges against the Duke of Lauderdale. In July he wrote a wise and statesmanlike letter to the king, advising him to renounce his project of raising a new company of guards. Together with Halifax he urged Charles to summon the parliament, and after his refusal resigned the treasury in November, the real cause being, according to one account, a demand upon the treasury by the duchess of Cleveland for £25,000, according to another "the niceness of touching French money," "that makes my Lord Essex's squeasy stomach that it can no longer digest his employment." This again is no surprise for Essex's high principles and sense of personal integrity, and probably his experience of the previous seven years, had made him less pliable and tolerant of the ambiguities in royal policy that made him able to support the Stop of the Treasury and Declaration of Indulgence in early 1672.

Subsequently, his political attitude underwent a change, the exact cause of which is not clear—probably a growing conviction of the dangers threatened by a Roman Catholic sovereign of the character of James. He now, in 1680, joined Shaftesbury's party and supported the Exclusion Bill, and on its rejection by the Lords carried a motion for an association to execute the scheme of expedients promoted by Halifax. On 25 January 1681 at the head of fifteen peers he presented a petition to the king, couched in exaggerated language, requesting the abandonment of the session of parliament at Oxford. He was a jealous prosecutor of the Roman Catholics in the Popish Plot, and voted for Lord Stafford's attainder. On the other hand, he interceded for Archbishop Plunkett, implicated in the pretended Irish Plot, but the King angrily replied that in view of Essex's closeness to Shaftesbury, Plunkett's blood was on his head : "you could have saved him but would not, I cannot save him for I dare not". He, however, refused to follow Shaftesbury in his extreme courses, declined participation in the latter's design to seize the Tower in 1682, and on Shaftesbury's consequent departure from England became the leader of Monmouth's faction, in which were now included Lord Russell, Algernon Sidney, and Lord Howard of Escrick.

Essex took no part in the wilder schemes of the party, but after the discovery of the Rye House Plot in June 1683, and the capture of the leaders, he was arrested at Cassiobury and imprisoned in the Tower.