During the 1921 elections, Hales was elected to the Second Dáil as a Sinn Féin member for the Cork Mid, North, South, South East and West constituency.
During the 1922 general election, he was elected to the Third Dáil as a Pro-Treaty Sinn Féin Teachta Dála (TD) for the same constituency. He received 4374 first preference votes (7.98%). Shortly afterwards, the Irish Civil War broke out between the Pro-Treaty faction, who were in favour of setting up the Irish Free State and the Anti-Treaty faction, who would not accept the abolition of the Irish Republic.
On 7 December 1922, Hales was killed by Anti-Treaty IRA men while he was on his way from lunch at a hotel on Ormonde Quay, along Dublin’s River Liffey, on his way to the Dáil, with another TD, Pádraic Ó Máille, who was also shot and badly wounded in the incident. His killing was in reprisal for the Free State’s execution of Anti-Treaty prisoners.
The Cabinet met in an emergency session and decided, after an all-night debate, on retaliatory executions of four Republican leaders captured in the Four Courts back in July – Liam Mellows, Rory O’Connor, Dick Barret and Joe McKelvey on 8 December. The executions were no more and no less than a reprisal killing for the death of Sean Hales.
According to information passed on to playwright Ulick O’Connor, an Anti-Treaty IRA volunteer named Owen Donnelly of Glasnevin was responsible for the killing of Hales. Seán Caffrey, an Anti-Treaty intelligence officer told O’Connor that Donnelly had not been ordered to shoot Hales specifically but was following the general order issued by Liam Lynch to shoot TDs or senators if they could.