Pharaohs served as kings over Egypt.

The pharaoh was the absolute monarch of the country and, at least in theory, wielded complete control of the land and its resources. The king was also the supreme military commander, responsible for all military and policy decisions. The king relied on a bureaucracy of officials to manage his affairs, and in charge of the administration was his second in command, the vizier. The vizier acted as the king's representative and coordinated land surveys, the treasury, building projects, the legal system, and the archives. At a local level, the country was divided into administrative regions called nomes which, by the late period, had reached 42 in number. Each nome's governor, called a nomarch, was accountable to the vizier for his jurisdiction. The temples formed the backbone of the economy and were not only houses of worship, but were also responsible for collecting and storing the nation's wealth in a system of granaries and treasuries. From these central storage facilities, administered by overseers, grain and goods could be distributed to the populace.

Egyptian society was highly stratified, and social status was expressly displayed. Farmers made up the bulk of the population, but agricultural produce was owned directly by the state, temple, or noble family that owned the land. Most of the population did not have freedom of movement or a free choice of career. Farmers were also subject to a labor tax and were required to work on irrigation or construction projects in a corvée system. Artists and craftsmen were of higher status than farmers, but they were also under state control, working in the shops attached to the temples and paid directly from the state treasury. Scribes and officials formed the upper class in ancient Egypt, prominently displaying their social status in art and literature. Slavery was known in ancient Egypt, but the extent and prevalence of its practice are unclear.

Much of the economy was centrally organized and strictly controlled. Although the ancient Egyptians did not use coinage, a commonly accepted means of exchange was known in other forms. The ancient Egyptian economy has been referred to as a money-barter system, with standard sacks of grain and the deben, a weight of roughly 91 grams of copper or silver, forming a common denominator. Workers were paid in grain; a simple laborer might earn 5½ sacks (191 kg) of grain per month, while a foreman might earn 7½ sacks (261 kg). Prices were fixed across the country and recorded in lists to facilitate trading; for example a shirt cost five copper deben, while a cow cost 140 deben. Grain could be traded for other goods, according to the fixed price list, but since it could not be kept indefinitely, the grain money system had a de facto negative interest attached to it.

During the fifth century BCE coined money was introduced into Egypt from abroad. At first the coins were used as standardized pieces of precious metal rather than true money, but in the following centuries international traders came to rely on coinage.

The head of the legal system in ancient Egypt was officially the pharaoh, who was responsible for proclaiming laws, delivering justice, and maintaining law and order, a concept the ancient Egyptians referred to as Ma'at. Though no legal codes from ancient Egypt survive, the many extant court documents of the period show that Egyptian law was based on a common-sense view of right and wrong that emphasized reaching agreements and resolving conflicts rather than strictly adhering to a complicated set of statutes.

The ancient Egyptians viewed men and women, including people from all social classes except slaves, as essentially equal under the law, and even the lowliest peasant was entitled to petition the vizier and his court for redress. Both men and women had the right to own and sell property, make contracts, marry and divorce, receive inheritance, and pursue legal disputes in court. Married couples could own property jointly and protect themselves from divorce by agreeing to marriage contracts, which stipulated the financial obligations of the husband to his wife and children should the marriage end.

Local councils of elders, known as Kenbet in the New Kingdom, were responsible for ruling in court cases involving small claims and minor disputes, although the Kenbet's ability to enforce its rulings was limited. Local Kenbets deferred serious or complicated cases involving murder, major land transactions, and tomb robbery to the Great Kenbet, over which the vizier or pharaoh presided. Plaintiffs and defendants were expected to represent themselves in legal matters and were required to swear an oath to an Egyptian deity that they had told the truth. In cases of tomb robbery or assassination plots, the state took on both the role of prosecutor and judge, and it could torture the accused with beatings to obtain a confession and the names of any co-conspirators. Whether the charges were trivial or serious, court scribes documented the complaint, testimony, and verdict of the case for future reference.

From the New Kingdom on oracles began to play a major role in the legal system, dispensing justice in both civil and criminal cases. The procedure was to ask the god, a question concerning the right or wrong of an issue, often in a form so that the answer was a simple "yes" or "no". The god, carried by a number of priests, rendered judgment by choosing one or the other, moving forward or backward, or pointing to one of the answers written on a piece of papyrus or an ostracon.

Punishment for minor crimes involved either imposition of fines, beatings, facial mutilation, or exile, depending on the severity of the offense. Serious crimes such as murder and tomb robbery were punished by execution, which was carried out by decapitation, drowning, or impaling the criminal on a stake. Punishment could also be extended to the criminal's family.