In February 2001, McAuliffe was elected chairman of the Democratic National Committee (DNC) and served until February 2005.During his tenure, the DNC raised $578 million and emerged from debt for the first time in its history. Prior to serving as chairman of the DNC, McAuliffe served as chairman of the DNC Business Leadership Forum in 1993 and as the DNC National Finance Chairman in 1994.
In 2001, McAuliffe founded the Voting Rights Institute. In June 2001, McAuliffe announced the founding of the Hispanic Voter Outreach Project to reach more Hispanic voters. The same year, he founded the Women’s Vote Center to educate, engage and mobilize women at the local level to run for office.

In the period between the 2002 elections and the 2004 Democratic convention, the DNC rebuilt operations and intra-party alliances. McAuliffe worked to restructure the Democratic primary schedule, allowing Arizona, New Mexico, Michigan and South Carolina to vote earlier; the move provided African-American and Hispanic communities greater inclusion in presidential primaries. According to The Washington Post, the move bolstered United States Senator John Kerry's fundraising efforts. The DNC rebuilt its headquarters and McAuliffe built the Democratic Party’s first National Voter File, a computer database of more than 175 million names known as "Demzilla." During the 2004 election cycle, the DNC hosted six presidential debates for the first time.

As chairman, McAuliffe was a champion of direct mail and Internet small giving and built a small donor base that eliminated the party’s debt and, according the Washington Post, “could potentially power the party for years”. Under his leadership, the DNC raised a total of $248 million from donors giving $25,000 or less during the 2003-2004 election cycle.

In January 2005, a few weeks before his term ended, McAuliffe earmarked $5 million of the party's cash to assist Tim Kaine and other Virginia Democrats in their upcoming elections. This donation was the largest nonpresidential disbursement in DNC history, and was part of McAuliffe's attempt to prove Democratic viability in Southern states in the wake of the 2004 presidential election. Kaine was successful in his bid, and served as the Governor of Virginia from 2006 to 2010.