Through the mediatory influence of the United States a military truce was arranged in January 1946, but battles between Nationalists and Communists soon resumed. Realizing that American efforts short of large-scale armed intervention could not stop the war, the United States withdrew the American mission, headed by General George C. Marshall, in early 1947. The civil war, in which the United States aided the Nationalists with massive economic loans but no military support, became more widespread. Battles raged not only for territories but also for the allegiance of cross sections of the population.

Belatedly, the Nationalist government sought to enlist popular support through internal reforms. The effort was in vain, however, because of the rampant corruption in government and the accompanying political and economic chaos. By late 1948 the Nationalist position was bleak. The demoralized and undisciplined Nationalist troops proved no match for the People's Liberation Army (PLA). The Communists were well established in the north and northeast. Although the Nationalists had an advantage in numbers of men and weapons, controlled a much larger territory and population than their adversaries, and enjoyed considerable international support, they were exhausted by the long war with Japan and the attendant internal responsibilities. In January 1949 Beiping was taken by the Communists without a fight, and its name changed back to Beijing. Between April and November, major cities passed from Guomindang to Communist control with minimal resistance. In most cases the surrounding countryside and small towns had come under Communist influence long before the cities. After Chiang Kai-shek and a few hundred thousand Nationalist troops fled from the mainland to the island of Taiwan, there remained only isolated pockets of resistance. In December 1949 Chiang proclaimed Taipei, Taiwan, the temporary capital of China.