Paasio participated in the municipal politics of Turku and was elected into the municipal council in 1965. Paasio became member of the Parliament in July 1975, however, he lost the seat in the 1979 parliamentary elections. In 1982 he replaced Jacob Söderman in the Parliament and hold the seat until he was elected into the European Parliament in 1996.
Paasio followed the path of his father, Rafael Paasio, when he was elected to succeed Kalevi Sorsa as the Chairman of Social Democratic Party in 1987. Paasio succeeded Sorsa in the government as the Minister of Foreign Affairs on 1 February 1989. However, Social Democratic Party suffered a defeat in 1991 parliamentary elections, which led to the resignation of Paasio as the party chairman.
His daughter Heli Paasio is a member of the Parliament.