A Democrat, Knott was elected to six terms in the U.S. House of Representatives, serving from March 4, 1867, to March 3, 1883. Knott opposed Radical Reconstruction and a high tariff. He won recognition for his 1871 "DULUTH" speech, in which he ridiculed federal aid for a proposed railroad. Knott was rejected for the Democratic gubernatorial nomination in 1871, but won endorsement in a party convention filled with controversy in 1883. He then won an easy victory over Republican Thomas Z. Morrow, 133,615 to 89,181. After he left office in 1887, Knott practiced law in Frankfort for five years. In 1887-88 he served as a special assistant to the Kentucky attorney general and in 1890 was elected to the state's constitutional convention. In 1894, after teaching civics and economics at Centre College in Danville, he became professor and dean of the school's new law department. Ill health forced his retirement in 1902, and he lived in Lebanon until his death on June 18, 1911. He was buried there.

Governor Knott asked for a thorough reform of the state's tax system, but the legislature gave him little more than a Board of Equalization that was charged with making equitable assessments. The legislature also refused to give the Railroad Commission all of the powers requested by the governor. The General Assembly finally approved construction of a new penitentiary at Eddyville, a project for which Gov. Luke Pryor Blackburn (1879-83) was largely responsible. Aided by the recommendations of a blue-ribbon commission of prominent citizens, Knott secured a comprehensive overhaul of the state's system of public education. Duties and responsibilities were spelled out, often for the first time, and a state teacher's association was authorized. A deficit of nearly $500,000 led Knott to renew his request for the transfer of a number of functions from the state to the county governments and for an end to the tax immunities that had been granted to corporations. Despite the violence in the form of feuds that was making Kentucky notorious, Knott refused to admit that crime was a serious issue, even when he failed to end a war fought for several years in Rowan County. He became known for the number of pardons he granted.

See Hambleton Tapp, "James Proctor Knott and the Duluth Speech," Register 70 (April 1972): 77-93.