In 1974, Emperor Haile Selassie's regime had lost public confidence within Ethiopia following a famine in Wello province, leading to the Ethiopian revolution. As a result, power came into the hands of a committee of low ranking officers and enlisted soldiers led by Atnafu Abate, which came to be known as the Derg. Originally, Mengistu was one of the lesser members, officially sent to represent the Third Division because his commander, General Nega Tegnegn considered him a trouble-maker and wanted to get rid of him. Between July and September 1974, Mengistu became the most influential member of the shadowy Derg, but preferred to act through more public members like his former mentor, general Aman Andom, and later Tafari Benti.
Haile Selassie died in 1975. It is rumored that Mengistu smothered the Emperor using a pillow case, but Mengistu has denied these rumors. Though several groups were involved in the overthrow, the Derg succeeded to power. However there is no doubt that the Derg under Mengistu's leadership ordered the deaths without trial of 61 ex-officials of the Imperial government on 23 November 1974, and later of numerous other former nobles and officials including the Patriarch of the Ethiopian Orthodox Church, Abuna Theophilos, in 1977. Mengistu himself has acknowledged that the Derg ordered these deaths, but refuses to accept personal responsibility. Members of the Derg have contradicted him in interviews given from imprisonment saying he inspired and was in full agreement with their decisions.
In the 1970s, Mengistu embraced the philosophy of Marxism-Leninism, which was increasingly popular among many nationalists and revolutionaries throughout Africa and much of the Third World at the time. Some have argued that Mengistu, whom his commanders did not consider to be an intellectual, was more of a nationalist than a convinced Marxist, but that Marxism provided the best ideology for those trying to resist the dominant world powers, a policy that had been skilfully followed by previous Ethiopian leaders not least Emperor Menelik II.
In early 1986, under Mengistu's direction, Ethiopia adopted a constitution modelled after that of the Soviet Union and saw the establishment of the Marxist-Leninist Worker's Party of Ethiopia(WPE), now the country's ruling party. On 10 September 1987, Mengistu became a civilian president under a new constitution, and the country was renamed the People's Democratic Republic of Ethiopia. Those members of the Derg who still survived all retired from the military and as civilians made up the Central Committee of the Politbureau of the WPE.
Mengistu made seven visits to the former Soviet Union between 1977 and 1984, as well as other visits to his political allies Cuba, Libya, South Yemen, and Mozambique. From 1983 to 1984 Mengistu served as head of the Organization of African Unity.
However, government's military position gradually weakened. First came the Battle of Afabet in March 1989, which was a humiliating defeat at the hands of the Eritrean People's Liberation Front, with 15,000 casualties and the loss of a great deal of equipment. This was followed up less than a year later by another crushing defeat at Shire, with over 20,000 men either killed or captured and the loss of even more equipment. Then on 16 May, while Mengistu had left for a four-day state visit to East Germany, senior military officials attempted a coup and the Minister of Defense,Haile Giyorgis Habte Mariam was killed; Mengistu returned within 24 hours and nine generals, including the air force commander and the army Chief of Staff, died as the coup was crushed..