When Reagan arrived in Hollywood in 1937, many actors pressured him into joining the new Screen Actors Guild (SAG); however, Reagan didn't really have any desire to do so. It was only after hearing some of his colleagues' stories about actors who had been railroaded out of the industry that he decided to join. Within a few years, he was even appointed to SAG's board of directors to represent new actors and actresses. He realized that SAG didn't really help its famous members who already had made their way in Hollywood, but only the small actors who needed protection. He served on the board of SAG for several years, and was eventually elected president of the organization in 1946. He served as president of SAG for five terms until he resigned after his last term in 1960.

As president of SAG, Reagan toured Hollywood and the country delivering speeches about the movie industry and the need to protect small actors working their way to the top. He also made speeches against what he believed to be a growing fascist movement in America. After seeing the atrocities of World War II on film while in the First Motion Picture Unit, Reagan was convinced that Americans needed to protect against racism and other forms of prejudice. As he traveled to speak to various groups, however, he became convinced that many groups in America were beginning in his estimation to forget everything the US had fought for in Europe and Asia. At the recommendation of his pastor, he also began speaking out against Communism in America, and that was when he sometimes noticed a change in his audience's responses in Hollywood. Usually Reagan's audiences would cheer and applaud during his speeches, but they would often become subdued when he mentioned the evils of Communism.

In 1946, Reagan became convinced that Communists were trying to infiltrate Hollywood via a dispute between an established actors' union and a new union, the Conference of Studios Union or CSU. He believed the CSU was supported by the Communist Party in Hollywood as well as branches of the Party in San Francisco. At this time, the United States produced a vast majority of the films shown in theatres throughout the world, and Reagan feared that the Soviets might try to control actors and directors in Hollywood in order to reduce the amount of anti-Communist propaganda the studios put in their films. The dispute was eventually settled, but it encouraged Reagan and other top members of the Screen Actors Guild to reissue their organization's mission statement to include anti- Communist sentiment. When several important members in SAG persuaded others to ignore the new statement, Reagan felt sure Communists had taken hold in the motion picture industry.

He believed his fears were confirmed when several FBI agents accosted him one evening in 1947 to question him about Communists in Hollywood. They showed him evidence that convinced him that the Soviets were plotting to take over the production studios. Reagan and his wife, Jane Wyman, released to the agents several big names in Hollywood whom they believed were Communist infiltrators and sympathizers. Reagan met with the FBI several more times to release more suspected names. His code name was T-10. As the Red Scare intensified in the US, his information became more and more valuable, and he eventually was asked to testify before the House Un-American Activities Committee in Congress. During his tenure as president of the Screen Actors Guild, Reagan actively blacklisted all those who he believed to be Communists.

Although Reagan's political career seemed to be blossoming, his acting career was slowly dying. By 1954, he was performing as the master of ceremonies for performances in a Las Vegas nightclub. But then, that same year, Reagan signed a contract to host and act in the television show General Electric Theater. Reagan had previously avoided television out of fear that it would one day grow too popular and replace motion pictures, especially considering that people could watch television programs without ever leaving the comforts of their own homes. The television deal was too lucrative to pass up, however, and so Reagan's performances appeared mostly on television in the 1950s rather than on the big screen. He also became an unofficial spokesman for General Electric during those years. Later on, Reagan also starred in the 1960s television series Death Valley Days.

Reagan also became a television producer through his talent agency MCA. This was where he made his fortune. Many, however, accused Reagan of unfair business practices, including the federal government. He was accused of using his position as president of the Screen Actors Guild to lock out television production competition by essentially granting MCA exclusive rights. In 1962, the US Justice Department investigated Reagan and MCA, although no indictments were issued.

Reagan's life during this time wasn't all fraught with trouble, however. On March 4, 1952, Reagan married actress Nancy Davis. The two had met after Nancy Davis's name appeared on a list of suspected Communists in Hollywood. After Reagan had done a little research–and learned that the Nancy Davis on the list was a different Nancy Davis–he met with her for dinner to explain the situation. They continued to see each other off and on for the next several months until Reagan finally half-jokingly suggested one day that they should get married. She agreed, and the two were married a couple months later. Their daughter Patricia was born later that year, and the family purchased 300 acres of land in the Santa Monica hills.