Because of the tremendous corruption of the Nationalist government, the United States hesitated in supporting the Nationalists right away. Instead, the Truman administration, and the Roosevelt administration before it, probed into the possibility of mediating between the Nationalists and Communists and a coalition government. In fact, during the war, the U.S. government had already probed into the possibility of cooperating with the Communists by sending to Yanan a group of American military advisers and State Department experts on China, called Dixie Mission (1944-47). American military advisers also helped train the military skills of the Chinese Communists. Once the anti-Japanese war was over, Presidents Franklin Roosevelt and Harry Truman sent first Patrick Hurley, then George Marshall, to broker the relationship between the Nationalists and Communists. Truman was known for his anti-Communist stance. But even he refused to lean completely to the side of the Nationalists, showing his disgust with Nationalist ineptitude and corruption. Ultimately, as George Marshall mentioned in his statement (Spence, 18.2), the Communists and Nationalists refused to reconcile with each other. Both were afraid compromise between the two parties would mean giving up too much what they currently had.

The Nationalist government was also faced with mounting pressure from many Chinese intellectuals who called for end to civil war and a peaceful coalition government. One of the most noticeable sources of protest was the National Southwestern Associated University, located in Kunming, Yunnan Province, southwestern China (close to southeast Asia). The National Southwestern Associated University consisted of students and faculty members of three prestigious universities, National Tsinghua University, National Peking University, and Private Nankai University, evacuated from Beijing and Tianjin, two northern cities because of the Japanese invasion, to the remote southwest that was not occupied by the Japanese. Two graduates from the university, Yang Zhenning and Li Zhengdao, later went to study in the United States and eventually won the Nobel Prize for Physics. Some faculty members were politically active. The majority of the faculty members were not Communists, but they wanted a cessation of war after Japan was defeated. Many other intellectuals in one way or another associated with the university were also working hard to forge a new united front of peace between the Nationalists and Communists. One of them, Li Gongpu, a veteran Nationalist who had participated in the Northern Expedition (1926-28), who had studied in the U.S. (1927-30) after the Nationalists split with the Communists, and who became a progressive journal editor after his return to Shanghai in 1930, because of his vocal support to forge a Nationalist-Communist alliance, was gunned down by Nationalists in July 1946. Four days later, after his funeral, his friend Wen Yiduo, professor of Chinese literature at Tsinghua University, because of his criticism of the autocracy of the Nationalist government, was gunned down right after he stepped out of Li's funeral. Both assassinations took place during George Marshall's mediation trip in China. Many American institutions called for ending U.S. economic support to the Nationalist government after learning the assassinations.

On the part of the Communists, they were equally insistent that they would not compromise with the Nationalists. Perhaps Mao could not forget how the Nationalists purged the Communists on those bloody days/nights of April and May of 1927 and how, after the Communists evacuated to the Jinggang Mountains in Jiangxi Province and started guerrilla warfare, his own wife and three children were arrested by the local warlord of Hunan Province, with his wife eventually beheaded, and his three children wandering as orphans. He was able to recover only two of them, with one of the two mentally traumatized. Civil war started. The Communists, because of the popular support they received from land they recovered from the Japanese in northern China (including in Manchuria), quickly, though after some bloody large scale battles, took over half of China. 

In January 1949, Chiang Kaishek feigned resigning from his presidency to dodge criticism of his presidency. Li Zongren, one of his colleagues, became the interim president. Chiang used his time off to busy prepare for the removal of his government to Taiwan, a Chinese island province about 100 miles off the southern Chinese coast. The battle of Nanjing of April 1949 was the last major battle between the Communists and Nationalists, because being the capital of the Nationalist government, Nanjing was the most fortified Chinese city in southern China. By then the majority of the Nationalist troops had already moved to Taiwan, made possible with American transportation. Even though his support to the Nationalists was reluctant, in principle President Truman felt he was obliged to support a "republican" regime against its encroaching Communist opponents.

Nationalist policies after 1945 were further jeopardized by the loss of financial control (at least partly because of money spent on crushing the Communists). Skyrocketing inflation in 1947-1949, and corresponding maltreatment of Nationalist soldiers, many of whom died of starvation and lacked proper winter clothes, led to large numbers of Nationalist defection to the Communist side, low Nationalist morale, and popular support to the Communists. The Communists officially declared their victory as the government of China on Oct.1, 1949, and redesignated Beijing as the Chinese capital.