Several factors probably contributed to Reagan's dramatic conversion from FDR Democrat to conservative Republican. To begin with, Reagan hated Communists and Soviet sympathizers and associated many liberal and leftist groups with them. The Republican Party was notorious for "hunting" Communists during the Red Scare of the 1950s. Secondly, many influential people in Reagan's family were Republicans including his brother Neil and his wife Nancy's father. As a popular celebrity and icon, Reagan also spent much of his time socializing with the rich and conservative Los Angeles elite. Others credit Reagan's political shift to the fact that the once poor actor had acquired several million dollars during his acting career and disliked paying up to ninety percent of his annual income in taxes to the government. He also disliked the liberal politicians in California and blamed them for the social unrest and the state's budgetary deficits in the 1950s and 1960s.

In 1946, Reagan became convinced that Communists were trying to infiltrate Hollywood. In order to catch them, Reagan and other top members of the Screen Actors Guild reissued their organization's mission statement to include anti- Communist sentiment. When several important members in the Guild persuaded others to ignore the new statement, Reagan felt sure Communists had taken hold not only in the Guild, but also in the entire motion picture industry. To help catch the Communists, Reagan and his then-wife Jane Wyman, released several big names in Hollywood whom they believed were Communist infiltrators and sympathizers to the FBI. 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 he believed to be Communists.

American citizens were outraged when the arms-for-hostages deal eventually leaked to the media in 1987. Not only had the administration disobeyed Congress, but it also had traded arms to the nation that freely announced its hatred of the United States. Congress launched numerous investigations to uncover the truth in the Iran-Contra scandal. Some of them even lasted for several years after Reagan left office. Many people associated with Reagan were indicted and convicted for their involvement in the scandal, including Lieutenant Colonel North. Although most historian believe Reagan himself authorized North and others to raise money and send arms to Iran and the Contras, no direct evidence was ever found to link him to the scandal, and he therefore escaped indictment.