He fought at several battles in Missouri, including the Battle of Wilson's Creek, where he guarded the supply trains. He quickly rose in rank to brigadier general by September 1861. Fighting in the Western Theater, he participated the operations against New Madrid, Missouri and the Battle of Island Number Ten. He was involved in numerous major battles, including the Second Battle of Corinth, where he commanded a division of infantry of the Army of the Mississippi, and the Battle of Stones River, in which he led the cavalry of the Army of the Cumberland. Stanley also led the Union cavalry in the Tullahoma Campaign. He fell ill late in 1863 and missed Chickamauga. In 1864, he fought under William Tecumseh Sherman as a division commander in the IV Corps of the Army of the Cumberland during the Atlanta Campaign, and he was promoted to command of the corps when Maj. Gen. Oliver O. Howard was named commander of the Army of the Tennessee. After the capture of the city, instead of employing him marching to the sea, Sherman dispatched Stanley and his IV Corps to Tennessee to help protect the state from invasion by John Bell Hood's Army of Tennessee.
For leading one of his brigades in a successful counterattack during a critical moment in the fighting at the Battle of Franklin on November 30, 1864, the United States Congress presented him with the Medal of Honor on March 29, 1893. Two of his divisions having been re-assigned to the defensive lines of the XXIII Corps before the battle, Stanley had no actual command. Two brigades of the remaining division, under Brig. Gen. George D. Wagner, were overwhelmed by the initial Confederate assault, having been left in an exposed position. It was for his role in the counterattack by the 3rd Brigade of Wagner's division that Stanley was awarded the medal. He was wounded in the neck at the same time and had his horse shot out from under him. Maj. Gen. Jacob Cox, commanding the defenses, provided Stanley a remount with which to seek medical attention, and Stanley did not participate further in the battle. He returned to corps only command only after the Battle of Nashville.
