During Prohibition, which was enacted nationally in 1919 and lasted until 1933, Johnson’s power reached its zenith. Prohibition was effectively unenforced in Atlantic City, and, as a result, the resort's popularity grew further. The city then dubbed itself as "The World's Playground". Most of Johnson’s income came from the percentage he took on every gallon of illegal liquor sold, and on gambling and pro****tution operations in Atlantic City.[2] Johnson once said:

“We have whisky, wine, women, song and slot machines. I won't deny it and I won't apologize for it. If the majority of the people didn't want them they wouldn't be profitable and they would not exist. The fact that they do exist proves to me that the people want them.”[2]

Investigators charged that Johnson's income from vice exceeded $500,000 a year (over $5,000,000 in 2012 dollars).[2] He rode in a chauffeur-driven, $14,000 powder blue limousine, and wore expensive clothes, including a $1,200 raccoon coat.[1] His personal trademark was a red carnation, fresh daily, worn in his lapel.[1] At the height of his power, Johnson lived in a suite of rooms on the ninth floor of the Ritz-Carlton Hotel, located on the Boardwalk.[1] The Ritz, which opened in 1921, was where Johnson hosted many lavish parties.[4] He was known as both “the Czar of the Ritz” and “the Prisoner of the Ritz”.[1] He freely gave to those in need, and was widely beloved by local citizens, among whom his benevolence and generosity were legendary.[1] Johnson once explained that "when I lived well, everybody lived well".[2]

Since its founding, Atlantic City had, like other summer resorts, been burdened with a seasonal economy, and efforts to promote tourism there during the colder months had not been successful. The free availability of alcohol during Prohibition, however, made Atlantic City the nation's premier location for holding conventions.[3] In an effort to promote a year-round convention-supported economy, Johnson directed the construction of Atlantic City Convention Hall.[3] Work on Convention Hall began in 1926 and it opened in May 1929.[5] A 650-foot by 350-foot structure, it was a state-of-the-art convention building, and contained what was then the largest room with an unobstructed view in history.[3][5]

Under Nucky Johnson, Atlantic City was one of the leading ports for importing bootleg liquor[3] and, in 1927, he agreed to participate in a loose organization of other bootleggers and racketeers along the east coast forming the Big Seven or Seven Group. He was the host of the Atlantic City Conference in 1929, a meeting of national organized crime leaders, including Al Capone. (A well-known photograph purporting to show Johnson and Capone walking down the Boardwalk together during the conference is of doubtful authenticity).[6]

Nucky's German personal assistant and valet was Louis Kessel.