Noah Glass, Evan Williams, and Biz Stone co-founded Odeo, later renamed Obvious Corporation, which then spun off Twitter, Inc. Dorsey became Twitter's chief executive officer (CEO) when it was founded in 2007. As CEO, Dorsey saw the startup through two rounds of funding by venture capitalists. As the service began to grow in popularity, Dorsey chose the improvement of uptime as top priority, even over creating revenue—which, as of 2008, Twitter was not designed to earn. Dorsey described the commercial use of Twitter and its API as two things that could lead to paid features. His three guiding principles, which he says the company shares, are simplicity, constraint, and craftsmanship.
Dorsey lost his position as CEO in 2008, reportedly for leaving work early to enjoy other pursuits, such as yoga and fashion design. On October 16, 2008, Williams took over as CEO, while Dorsey became chairman of the board. During his time as chairman, Dorsey joined several State Department delegations, including a trip to Iraq in April 2009, led by Jared Cohen. In November, when Iranians took to the streets in the Green Revolution, Twitter was scheduled to conduct maintenance of its site, which would entail temporarily shutting down Twitter's servers. Dorsey responded to a request from Cohen to delay the maintenance so that it would not affect the protests in Iran, because Iranians were using Twitter to communicate and coordinate. Since President Obama had announced that there would be no meddling in Iran, the move sparked controversy. In February 2010, Dorsey was part of another State Department delegation, this time to Russia. In March 2011, he returned to Twitter as executive chairman after Dick Costolo replaced Williams as CEO. In July 2015, Costolo resigned as CEO, with Dorsey assuming the post of interim CEO. He was named permanent CEO in October 2015.
In May 2016, Dorsey announced that Twitter would not count photos and links in the 140-character limit to free up more space for text. This was an attempt to entice new users, since the number of tweets per day had dropped from about 500 million in September 2013 and its peak of 661 million in August 2014 to about 300 million in January 2016.
On November 22, 2016, Dorsey was briefly suspended from his own Twitter account with 3.9 million followers. After restoring the account, Dorsey tweeted that the suspension was due to an "internal mistake".
Twitter introduced recommendation algorithms in the main feed in 2016. Dorsey wrote in 2022 that "The biggest mistake I made was continuing to invest in building tools for us to manage the public conversation, versus building tools for the people using Twitter to easily manage it for themselves."
In February 2017, Dorsey and Executive Chairman Omid Kordestani matched a $530,000 donation to the American Civil Liberties Union (ACLU) raised by Twitter staffers. Their match brought the total donation to $1.59 million.
In March 2018, Dorsey announced that an improved version of the verification system would be coming to Twitter. The purpose of redesigning verification was to let people verify more facts about themselves, emphasizing proof of identity. The overhaul was not in place before the U.S midterm election of 2018 to help in verifying the identities of the candidates.
In September 2018, Dorsey testified before the Senate Intelligence Committee alongside Facebook COO Sheryl Sandberg about the use of social media by Russia and others to meddle in the 2016 presidential election. Following this testimony, Twitter shares fell six percent.
Dorsey met privately with U.S. President Donald Trump at the White House and discussed Trump's concerns that Twitter had limited or removed some of his Twitter followers, and those of conservatives. After the meeting, Dorsey tweeted that their discussion included making Twitter "healthier and more civil". A week earlier, Dorsey took part in a TED talk about the social media platform's spread of abuse and misinformation, which has brought him criticism.
On August 30, 2019, Dorsey's personal Twitter account was allegedly breached for nearly an hour by a group calling itself the Chuckling Squad, posting and retweeting numerous racist tweets.
On October 23, 2019, Twitter's stock price fell by nearly 21 percent, to $30.75. The reason was an earnings miss off a third quarter report, which Twitter blamed on ad targeting problems. Dorsey had been making a concerted effort to dampen the effect that Twitter had on political elections, which entailed banning all political ads. This was also seen as a large contributor to the drop. Dorsey announced that, as of November 22, 2019, Twitter would ban all political advertising, which applied globally to all marketing campaigns about political issues. This policy was removed in August 2023 after ownership was transferred to Elon Musk.
On February 29, 2020, it was announced that activist hedge fund Elliott Management led by billionaire Paul Singer was looking to oust Dorsey and nominate four directors to Twitter's board, including Elliott's senior portfolio manager Jesse Cohn. The two parties reached an agreement days later, with Dorsey remaining CEO.
In October 2020, Dorsey was one of several tech firm CEOs subpoenaed by the US Senate Commerce Committee. Republican Roger Wicker, who chaired the committee, led the charge to force the CEOs of Twitter, Facebook and Google to testify about the legal immunity the tech platforms receive under Section 230 of the Communications Act of 1996.
He announced his immediate resignation as Twitter's CEO on November 29, 2021. Dorsey was replaced by the company's former CTO Parag Agrawal, who took over as CEO. Dorsey continued to lead as the CEO of Block, Inc. In May 2022, Dorsey left the board of directors of the social network.
In October 2022, Dorsey retained his 2.4% ownership of Twitter when the company was sold to Elon Musk.