Gutiérrez entered the national spotlight during the 2000 Ecuadorian coup d'état that unseated President Jamil Mahuad for three hours and forced him to abandon office after demonstrations in Quito by thousands of Indigenous Ecuadorians protested the Mahuad government's support of neoliberal economic policies, particularly the proposed dollarization plans. Instead of ordering to disperse the protesters, then Col. Gutiérrez and the army stood aside and let them take over the national parliament.
Under pressure from the United States, and lacking support from the indigenous movement, the Junta was dissolved by General Carlos Mendoza and the Congress named then Vice President Gustavo Noboa as president of the country. The armed forces jailed Gutiérrez for six months, but he was discharged, and faced no criminal prosecution despite the fact he was a direct participant.
Prior to the 2000 coup, Gutiérrez was aide-de-camp to former presidents Abdalá Bucaram and Fabián Alarcón. He claimed that, during the demonstrations that unseated Bucaram in February 1997, he also disobeyed orders to protect Carondelet Palace, leaving Bucaram no other choice but to leave.
Gutiérrez ran for President in 2002 as the candidate of the January 21 Patriotic Society Party (PSP), named for the date of the 2000 protest, and the Pachakutik Movement, on a platform of fighting corruption and reversing neoliberal economic reforms. He defeated banana magnate and wealthiest man in Ecuador, Álvaro Noboa, in the second round with 55% of the popular vote, through a partnership with the leftist and indigenous movement parties, Democratic People's Movement (Movimiento Popular Democratico/MPD) and Pachacutik, respectively.
Gutiérrez alienated many of his supporters by supporting the Free Trade Area of the Americas (FTAA) and by keeping the status-quo on economic issues. After three months of government, Gutiérrez broke his alliance with leftist parties and reached an agreement with the Social Christian Party (Partido Social Cristiano/PSC), continuing the economic policies of its predecessors and increasing bonds with the United States. The government received increased frequent accusations of corruption and nepotism. After two years, Gutiérrez broke the agreement with the PSC, further weakening the government politically.