A physician by profession, Oberg was first elected to the Legislative Assembly of Alberta as an Progressive Conservative in 1993. He was first appointed to the Alberta Cabinet in 1997 and served numerous posts. Dr. Oberg was appointed Minister of Family and Social Services in March 1997. Over the next two years, he oversaw the move of children’s services and services for persons with developmental disabilities to community-based delivery. He launched a western Canadian initiative to address Fetal Alcohol Syndrome and implemented an interprovincial strategy to share resources and develop new and better approaches for addressing FAS. As part of the Alberta Children’s Agenda, he introduced the Alberta Child Health Benefit Program and played a key role in the development of the Protection of Children Involved in Prostitution Act.
In May 1999, Dr. Oberg was appointed Minister of Learning, a post he held until November 2004. During that time, he also served as a member of Treasury Board and as the Minister responsible for immigration. Dr. Oberg was an active member of the Canadian Ministers of Education and led the Canadian delegation to an International Group of Eight (G8) Education Ministers meeting. He oversaw the creation of Alberta’s Commission on Learning and implemented many of its recommendations, including the reduction of provincial class sizes. He began the second language initiative in Alberta schools to give students an edge in the world marketplace and initiated the development of the daily physical activity program to improve the health of Alberta students.
Following his re-election in the November 22, 2004 election, Dr. Oberg was appointed Minister of Infrastructure and Transportation.
On March 22, 2006, shortly after announcing his resignation from his ministerial position following a directive from Premier Ralph Klein to all ministers running to replace him, Oberg was removed from the Progressive Conservative caucus after making comments at a Strathmore-Brooks Constituency Association annual general meeting urging the membership to vote their conscience in a crucial leadership vote at the March 2006 AGM of the party. He was re-admitted to caucus on July 25, 2006.
Oberg also ran for the leadership of the Progressive Conservative Party in Alberta, but failed to place in the top three in the November 25th First Ballot (he placed fourth), and thus was not eligible for the Second Ballot to be held on December 2. Oberg's allegations of scandal on front runner Jim Dinning in the summer of 2006 appeared to have had a negative effect on his campaign. He later threw his support to third place finisher and eventual winner Ed Stelmach.
On December 15, 2006 Lyle Oberg was named Minister of Finance in Premier Ed Stelmach's cabinet.
Oberg announced in December 2007 that he would not seek re-election in the next election in March 2008.
On June 2, 2010 Oberg opened C2DNA in Edmonton, the first private DNA testing facility in Canada. He founded the lab with his brother and other investors.
On March 1, 2011, Oberg announced that he was joining the right-wing Wildrose Alliance Party. He said he would not be running for office but would participate in an advisory role to party leader Danielle Smith. He cited the conservative government's decision to abolish the multiple health districts in Alberta and replace them with an Edmonton based super board, and the recently announced deficit budget, the fourth in as many years, as his reason for the switch.