Neither MacArthur nor Yamashita wanted to fight over Manila, but the Japanese naval commander in the city, Rear Admiral Sanji Iwabuchi, decided to fortify the inner city and order his forces to fight to the death. The Battle of Manila was the largest urban battle of the Pacific War involving US forces. The 37th Infantry Division, 1st Cavalry Division, and 11th Airborne Division had not to this point in the war engaged in urban combat, but the American forces adapted their tactics, techniques, and procedures quickly to the urban jungle. Undisciplined Japanese soldiers committed atrocities that killed thousands of Filipinos. While the battle in Manila raged, the 503rd Parachute Infantry Regiment parachuted onto Corregidor and, in conjunction with other forces, retook the island. Manila was ruined by the fighting, with 11,000 buildings and bridges destroyed or badly damaged. Cultural landmarks such as churches and cathedrals, as well as the centuries-old walled city of Intramuros, were heavily damaged or reduced to rubble. Of greatest import for US forces, the port and industrial areas had been demolished by the Japanese and would have to be reconstructed to make them usable.

The Philippines campaign was the largest and costliest waged by the US armed forces in the Pacific during World War II. Central to the campaign is the role played by General Douglas MacArthur, one of the most controversial military leaders in US history. In 1941, Roosevelt needed a commander in the Philippines who could unify the American and Filipino forces and provide the needed energy and strategic acumen to defend the islands against a Japanese invasion. On the same day he signed the embargo against Japan in July 1941, Roosevelt reinstated MacArthur as a general in the US Army and gave him command of a new organization, the US Army Forces in the Far East, which would control all US and Philippine army forces in the region. MacArthur formed a staff, the “Bataan Gang,” that would support him over the long war to come. In the fighting of 1941–1942, MacArthur badly bungled the defense of the Philippines, resulting in the largest mass surrender of forces in US history. MacArthur was able to escape to fight another day in Australia, but, for the troops left behind, three years of desultory and brutal life in Japanese prison camps awaited.