Capehart attained fame as the father of the jukebox industry. He worked for the company Holcomb and Hoke, which made record players, until 1928. He started his own company in 1928, and was forced out of the company by investors in 1931. The company folded in 1939. In 1932 Capehart formed a new company called Packard. Packard developed the Simplex mechanism for automatic record changing, and sold the device to Wurlitzer. The entire company was eventually bought by Wurlitzer.

Capehart was elected to the United States Senate in 1944 as a Republican from Indiana and served three terms, losing the 1962 election to Birch Bayh. He was opposed to big government and supported anti-interventionist foreign policy.

Capehart supported efforts to compromise with the Japanese on terms of surrender in the Summer of 1945. When Senate Minority Leader Wallace H. White, Jr. stated that the war might end sooner if President Truman would state specifically in the upper chamber just what unconditional surrender meant for the Japanese, Capehart called a press conference the same day to state that "it isn't a matter of whether you hate the Japs or not. I certainly hate them. But what's to be gained by continuing a war when it can be settled now on the same terms as two years from now?"

He was critical of the Truman administration and the military for their postwar policies in Germany, accusing Truman and General Dwight D. Eisenhower of a conspiracy to starve the remains of the German nation (see Eisenhower and German POWs).

He is remembered for backing, with Senator Kenneth Wherry, legislation for building military family housing in the post World War II era, when there were critical shortages of such housing.

He was also an advocate of clean air legislation.