Dunstan worked as a silversmith and in the scriptorium while he was living at Glastonbury. It is thought likely that he was the artist who drew the well-known image of Christ with a small kneeling monk beside him in the Glastonbury Classbook, "one of the first of a series of outline drawings which were to become a special feature of Anglo-Saxon art of this period." Dunstan became famous as a musician, illuminator, and metalworker. Lady Æthelflæd, King Æthelstan's niece, made Dunstan a trusted adviser, and on her death, she left a considerable fortune to him. He used this money later in life to foster and encourage a monastic revival in England. At about the same time, his father, Heorstan, died, and Dunstan inherited his fortune as well. He became a person of great influence, and on the death of King Æthelstan in 940, the new King, Edmund, summoned him to his court at Cheddar and made him a minister.

Again, royal favour fostered jealousy among other courtiers and again, Dunstan's enemies succeeded in their plots. The King was prepared to send Dunstan away.   There were then at Cheddar certain envoys from the "Eastern Kingdom", which probably meant East Anglia. Dunstan implored the envoys to take him with them when they returned to their homes. They agreed to do so, but it never happened. The story is recorded:

... the king rode out to hunt the stag in Mendip Forest. He became separated from his attendants and followed a stag at great speed toward the Cheddar cliffs. The stag rushed blindly over the precipice and was followed by the hounds. Eadmund endeavoured vainly to stop his horse; then, seeing death to be imminent, he remembered his harsh treatment of St Dunstan and promised to make amends if his life was spared. At that moment, his horse was stopped on the very edge of the cliff. Giving thanks to God, he returned forthwith to his palace, called for St. Dunstan and bade him follow, then rode straight to Glastonbury. Entering the church, the king first knelt in prayer before the altar, then, taking St. Dunstan by the hand, he gave him the kiss of peace, led him to the abbot's throne and, seating him thereon, promised him all assistance in restoring Divine worship and regular observance.

Dunstan, now Abbot of Glastonbury, worked at once on the task of reform. He had to re-create monastic life and rebuild the abbey. He began by establishing Benedictine monasticism at Glastonbury. The Rule of St. Benedict was the basis of his restoration according to the author of 'Edgar's Establishment of the Monasteries' (written in the 960s or 970s) and according to Dunstan's first biographer, who had been a member of the community at Glastonbury. Their statements are also in accordance with the nature of his first measures as abbot, with the significance of his first buildings, and with the Benedictine leanings of his most prominent disciples.

Nevertheless, not all the members of Dunstan's community at Glastonbury were monks who followed the Benedictine Rule. In fact, Dunstan's first biographer, 'B.', was a cleric who eventually joined a community of canons at Liège after leaving Glastonbury.

Dunstan's first care was to rebuild the Church of St. Peter, rebuild the cloister, and re-establish the monastic enclosure. The secular affairs of the house were committed to his brother, Wulfric, "so that neither himself nor any of the professed monks might break enclosure." A school for the local youth was founded and soon became the most famous of its time in England. A substantial extension of the irrigation system on the surrounding Somerset Levels was also completed.

Within two years of Dunstan's appointment, in 946, King Edmund was assassinated. His successor was Eadred. The policy of the new government was supported by the Queen Mother, Eadgifu of Kent, by the Archbishop of Canterbury, Oda, and by the East Anglian nobles, at whose head was the powerful ealdorman Æthelstan the "Half-king". It was a policy of unification and conciliation with the Danish half of the kingdom. The goal was a firm establishment of royal authority. In ecclesiastical matters, it favoured the spread of Catholic observance, the rebuilding of churches, the moral reform of the clergy and laity, and the end of the religion of the Danes in England. Against all these reforms were the nobles of Wessex, who included most of Dunstan's own relatives and who had an interest in maintaining established customs. For nine years, Dunstan's influence was dominant, during which time he twice refused the office of bishop (that of Winchester in 951 and Crediton in 953), affirming that he would not leave the king's side so long as the king lived and needed him.

In 955, Eadred died, and the situation was at once changed. Eadwig, the elder son of Edmund, who then came to the throne, was a headstrong youth wholly devoted to the reactionary nobles. According to one legend, the feud with Dunstan began on the day of Eadwig's coronation when he failed to attend a meeting of nobles. When Dunstan eventually found the young monarch, he was cavorting with a noblewoman named Ælfgifu and her mother, and refused to return with the bishop. Infuriated by this, Dunstan dragged Eadwig back and forced him to renounce the girl as a "strumpet". Later, realising that he had provoked the king, Dunstan fled to the apparent sanctuary of his cloister, but Eadwig, incited by Ælfgifu, whom he married, followed him and plundered the monastery.

Although Dunstan managed to escape, he saw that his life was in danger. He fled England and crossed the channel to Flanders, where he found himself ignorant of the language and the customs of the locals. The count of Flanders, Arnulf I, received him with honour and lodged him in the Abbey of Mont Blandin, near Ghent. This was one of the centres of the Benedictine revival in that country, and Dunstan was able, for the first time, to observe the strict observance that had seen its rebirth at Cluny at the beginning of the century. His exile was not of long duration. Before the end of 957, the Mercians and Northumbrians revolted and drove out Eadwig, choosing his brother Edgar as king of the country north of the Thames. The South remained faithful to Eadwig. At once, Edgar's advisers recalled Dunstan.

On Dunstan's return, Archbishop Oda consecrated him a bishop and, on the death of Coenwald of Worcester at the end of 957, Oda appointed Dunstan to the see.

In the following year, the see of London became vacant and was conferred on Dunstan, who held it simultaneously with Worcester. In October 959, Eadwig died, and his brother Edgar was readily accepted as ruler of Wessex. One of Eadwig's final acts had been to appoint a successor to Archbishop Oda, who died on 2 June 958. The chosen candidate was Ælfsige of Winchester, but he died of cold in the Alps as he journeyed to Rome for the pallium. In his place, Eadwig then nominated the Bishop of Wells, Byrhthelm. As soon as Edgar became king, he reversed this second choice because Byrhthelm had not been able to govern even his first diocese properly. The archbishopric was then conferred on Dunstan. 

Dunstan went to Rome in 960 and received the pallium from Pope John XII. On his journey there, Dunstan's acts of charity were so lavish as to leave nothing for himself and his attendants. His steward complained, but Dunstan seems to have suggested that they trust in Jesus Christ.

On his return from Rome, Dunstan at once regained his position as virtual prime minister of the kingdom. By his advice, Ælfstan was appointed to the Bishopric of London and Oswald to that of Worcester. In 963, Æthelwold, the Abbot of Abingdon, was appointed to the See of Winchester. With their aid and with the ready support of King Edgar, Dunstan pushed forward his reforms in the English Church. The monks in his communities were taught to live in a spirit of self-sacrifice, and Dunstan actively enforced the law of celibacy whenever possible. He forbade the practices of simony (selling ecclesiastical offices for money) and ended the custom of clerics appointing relatives to offices under their jurisdiction. Monasteries were built, and in some of the great cathedrals, monks replaced the secular canons; in the rest, the canons were obliged to live according to rule. The parish priests were compelled to be qualified for their office; they were urged to teach parishioners not only the truths of the Christian faith, but also trades to improve their position. The state saw reforms as well. Good order was maintained throughout the realm and there was respect for the law. Trained bands policed the north, and a navy guarded the shores from Viking raids. There was a level of peace in the kingdom unknown in living memory.

In 973, Dunstan's statesmanship reached its zenith when he officiated at the coronation of King Edgar. Edgar was crowned at Bath in an imperial ceremony planned not as the initiation, but as the culmination of his reign (a move that must have taken a great deal of preliminary diplomacy). This service, devised by Dunstan himself and celebrated with a poem in the Anglo-Saxon Chronicle, forms the basis of the present-day British coronation ceremony. There was a second symbolic coronation held later. This was an important step, as other kings of Britain came and gave their allegiance to Edgar at Chester. Six kings in Britain, including the kings of Scotland and Strathclyde, pledged their faith that they would be the king's liege-men on sea and land.

Edgar ruled as a strong and popular king for 16 years. Edgar's reign, and implicitly his governing partnership with Dunstan, was praised by early chroniclers and historians who regarded it as a golden age. The Anglo-Saxon Chronicle caveated the acclaim with one complaint, criticising the high level of immigration that took place at that time. It would appear from William of Malmesbury's later history that the objection was limited to the mercenary seaman, employed from around the North Sea littoral, to assist in the country's defence.

In 975, Edgar was succeeded by his eldest son, Edward "the Martyr". His accession was disputed by his stepmother, Ælfthryth, who wished her own son Æthelred to reign. Through the influence of Dunstan, Edward was chosen and crowned at Winchester. Edgar's death had encouraged the reactionary nobles, and at once, there was a determined attack upon the monks, the protagonists of reform. Throughout Mercia, they were persecuted and deprived of their possessions. Their cause, however, was supported by Æthelwine, the ealdorman of East Anglia, and the realm was in serious danger of civil war. Three meetings of the Witan were held to settle these disputes at Kyrtlington, Calne, and Amesbury. At the second of them, the floor of the hall where the Witan was sitting gave way, and all except Dunstan, who clung to a beam, fell into the room below; several men were killed.

In March 978, King Edward was assassinated at Corfe Castle, possibly at the instigation of his stepmother, and Æthelred the Unready became king. His coronation on Low Sunday, 31 March 978, was the last state event in which Dunstan took part. According to William of Malmesbury, writing over a century later, when the young king took the usual oath to govern well, Dunstan addressed him in solemn warning. He criticised the violent act whereby he became king and prophesied the misfortunes that would fall on the kingdom, but Dunstan's influence at court was ended. Dunstan retired to Canterbury to teach at the cathedral school.

Only three more public acts are known. In 980, Dunstan joined Ælfhere of Mercia in the solemn translation of the relics of King Edward, soon to be regarded as a saint, from their grave at Wareham to a shrine at Shaftesbury Abbey. In 984, in obedience to a vision of Andrew the Apostle, he persuaded King Æthelred to appoint Ælfheah as Bishop of Winchester in succession to Æthelwold. In 986, Dunstan induced the king, by donating 100 pounds of silver, to stop his persecution of the See of Rochester.

Dunstan's retirement at Canterbury consisted of long hours, both day and night, spent in private prayer, as well as his regular attendance at Mass and the daily office. He visited the shrines of St Augustine and St Æthelberht, and there are reports of a vision of angels who sang to him heavenly canticles. He worked to improve the spiritual and temporal well-being of his people, to build and restore churches, to establish schools, to judge suits, to defend widows and orphans, to promote peace, and to enforce respect for purity. He practised his crafts, made bells and organs and corrected the books in the cathedral library. He encouraged and protected European scholars who came to England, and was active as a teacher of boys in the cathedral school. On the vigil of Ascension Day 988, it is recorded that a vision of angels warned he would die in three days. On the feast day itself, Dunstan said Mass and preached three times to the people: at the Gospel, at the benediction, and after the Agnus Dei. In this last address, he announced his impending death and wished his congregation well. That afternoon he chose the spot for his tomb, then went to his bed. His strength failed rapidly, and on Saturday morning, 19 May, he caused the clergy to assemble. Mass was celebrated in his presence, and then he received Extreme Unction and the Viaticum, and died. Dunstan's final words are reported to have been, "He hath made a remembrance of his wonderful works, being a merciful and gracious Lord: He hath given food to them that fear Him."

The English people accepted him as a saint shortly thereafter. He was formally canonised in 1029. That year, at the Synod of Winchester, St Dunstan's feast was ordered to be kept solemnly throughout England.