Gulley served as Mayor of Durham for two terms, from December 1985 to December 1989. As Mayor, Gulley initiated Durham's affordable housing program, led neighborhood protection and center city revitalization efforts, and negotiated the City's acquisition of the local bus system from the Duke Power Company.
Beginning in 1993, he served six (two year) terms in the North Carolina Senate, where he represented constituents in Durham, Granville and Person counties. During his time in the state Senate, Gulley sponsored legislation that led to North Carolina's and the nation's first public financing of election campaigns for judicial office (for NC Supreme Court and NC Court of Appeals seats), as well as numerous campaign law reforms. He also led the Senate's Transportation Appropriations committee for five years, working to expand overall transportation funding with an emphasis on public transit and road maintenance. Gulley also sponsored and led efforts to prohibit predatory lending in North Carolina, helping end "payday" lending in the state, as well as several key environmental measures.
In March 2004, Gulley announced that his retirement from the General Assembly, effective 19 March 2004, to become the General Counsel for the Triangle Transit, the regional public transit agency. In that capacity he is helping lead regional efforts to initiate passenger rail service and expanded transit options.