He entered parliament as MP for West Stirlingshire in 1922 and became close to the Clydeside group of MPs led by James Maxton, though his views were more consensual than the latter. He was appointed as Under-secretary of State for Scotland in the Ramsay MacDonald Labour Government of 1929, and a Cabinet post in 1931.
Just prior to the declaration of war in 1939 he became regional commissioner for civil defence in Scotland and when Winston Churchill became Prime Minister, he persuaded Johnston to join the coalition government as Secretary of State for Scotland (1941-45).
As Secretary of State, he was instrumental in creating the Scottish Council on Industry and in 1943 the North of Scotland Hydro-electric Board to generate employment, improve social conditions, and power new industries. He was the Board's Chairman from 1945 to 1959, by which time most of the Board's generation stations were complete and the supply network had extended to almost 90% of the country.
He was highly regarded as a particularly effective and one of the greatest Scottish secretaries. He also acted as Chairman of the Forestry Commission, the Scottish Tourist Board and was a governor for the BBC and, on principle, took no payment for these positions.