Lunalilo died on February 3, 1874, and Kalākaua was elected to replace him.

Upon ascending the throne, Kalākaua named his brother, William Pitt Leleiohoku, as his heir, putting an end to the era of elected kings in Hawaii.

Kalākaua started his reign off with a tour of the Hawaiian islands. This improved his popularity.

In October 1874, Kalākaua sent representatives to the United States to negotiate a reciprocity treaty to help end a depression that was ongoing in Hawaii. In November, Kalākaua himself traveled to Washington DC to meet Ulysses S. Grant. An agreement was reached and the treaty was signed on January 30, 1875. The treaty allowed certain Hawaiian goods, mainly sugar and rice, to be admitted into the United States tax-free.

During the early part of Kalākaua's reign, the king made full use of his power to appoint and dismiss cabinets. King Kalākaua believed in the hereditary right of the alii to rule. Kalākaua continually dismissed cabinets and appointed new ones. This drew criticism from people from the "Missionary Party" who wanted to reform Hawaiian government based on the model of the United Kingdom's constitutional monarchy where the monarch had very little real power over the government but had a position of great dignity and was the head of state. The party believed the legislature should control the cabinet ministers rather than the king. This struggle continued throughout Kalākaua's reign.

In 1881, King Kalākaua left Hawaii on a trip around the world to study the matter of immigration and to improve foreign relations. He also wanted to study how other rulers ruled. In his absence, his sister and heir, Princess Lili{{okina}}uokalani, ruled as regent (Prince Leleiohoku, the former heir, had died in 1877). The King first traveled to San Francisco where he was given a royal welcome. Then he sailed to the Empire of Japan where he met with the Meiji Emperor. He continued through Qing Dynasty China, Siam, Burma, British Raj India, Egypt, Italy, Belgium, the German Empire, Austria-Hungary, the French Third Republic, Spain under the Restoration, Portugal, the United Kingdom of Great Britain and Ireland, and back through the United States before returning to Hawaii. During this trip, he met with many other crowned heads of state, including Pope Leo XIII, Umberto I of Italy, and Victoria of the United Kingdom. In this, he became the first king to travel around the world.

Kalākaua also built {{okina}}Iolani Palace, the only royal palace that exists on American soil today. Many of the furnishings in the palace were ordered by Kalākaua while he was in Europe.

King Kalākaua is said to have wanted to build a Polynesian Empire. In 1886, legislature granted the government $30,000 for the formation of a Polynesian confederation. The King sent representatives to Sāmoa, where Malietoa Laupepa agreed to a confederation between the two kingdoms. This confederation did not last very long, however, since King Kalākaua lost power the next year to the Bayonet constitution, and thus a reformist party came into power that ended the alliance.

By 1887, the Missionary party had grown very frustrated with Kalākaua. They blamed him for the Kingdom's growing debt and accused him of being a spendthrift. Some foreigners wanted to force King Kalākaua to abdicate and put his sister Liliuokalani onto the throne, while others wanted to end the monarchy altogether and annex the islands to the United States. The people who favored annexation formed a group called the Hawaiian League. In 1887, members of the League armed with guns assembled together. The King was frightened by this show of force and offered to transfer his powers to the foreign ministers representing the United States, the United Kingdom, or Portugal. The members of the league instead asked him to sign a new constitution.

This new constitution, nicknamed the Bayonet Constitution of 1887, removed much of the King's executive power and deprived most native Hawaiians of their voting rights. The legislature was now able to override a veto by the King, and the King was no longer allowed to take action without approval of the cabinet. The House of Nobles, the house of legislature appointed by the King, was to be elected. It also inserted a provision that allowed non-Hawaiian citizens to vote. A counter-revolution, led by a man named Robert Wilcox, aimed at restoring the King's power, but this revolution failed.

By 1890, the King's health began to fail. Under the advice of his physician, he traveled to San Francisco. His health continued to worsen, and he died on January 20, 1891. His remains were returned to Honolulu aboard the American cruiser, USS ''Charleston'' (C-2). Because he and his wife, Queen Kapiolani, did not have any children, Kalakaua's sister, Lili{{okina}}uokalani, succeeded him to the Hawaiian throne.